Keycorp v. Holland et al

Filing 103

MEMORANDUM OPINION AND ORDER granting 91 Motion for Sanctions filed by Keycorp. Joint Status Report due by 12/28/2016. (Ordered by Magistrate Judge David L Horan on 11/10/2016) (mcrd)

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
KEYCORP,
Plaintiff,
V.
ALLISON HOLLAND, et al.,
Defendants.

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No. 3:16-cv-1948-D

MEMORANDUM OPINION AND ORDER1
Plaintiff KeyCorp has filed a Motion for Sanctions Against Defendant Martin
Mbeteni [Dkt. No. 91] (the “Sanctions Motion”) under Federal Rule of Civil Procedure
37(b). United States District Judge Sidney A. Fitzwater has referred the Sanctions
Motion to the undersigned United States magistrate judge for hearing, if necessary,
and recommendation or determination pursuant to 28 U.S.C. § 636(b). See Dkt. No. 92.
Defendant Martin Mbeteni (“Mbeteni”) has filed a response, see Dkt. No. 99, and
KeyCorp has filed a reply, see Dkt. No. 102. The Court determines that a hearing or
oral argument is not necessary to resolve the Sanctions Motion.
For the reasons and to the extent explained below, the Court GRANTS Plaintiff
KeyCorp’s Motion for Sanctions Against Defendant Martin Mbeteni [Dkt. No. 91]. See

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issues presented in this case, and not for publication in an official reporter, and should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.
1

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generally Brown v. Bridges, No. 3:12-cv-4947-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 non-dispositive 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).
Background
The Sanction Motion ultimately arises out of the Court’s ruling on KeyCorp’s
August 24, 2016 Motion for Expedited Discovery and Rule 34 Examination of Computer
Systems [Dkt. No. 30] (the “Expedited Discovery Motion”) but, more particularly,
KeyCorp contends that Mbeteni has violated the Court’s October 26, 2016
Memorandum Opinion and Order [Dkt. No. 87], which granted in part and denied in
part KeyCorp’s Motion to Compel Defendant Mbeteni’s Responses to Plaintiff’s
Discovery Requests [Dkt. No. 77] (the “Mbeteni MTC”).
Judge Fitzwater ruled on the Expedited Discovery Motion separately as to
Holland, who had agreed to a consent order that Judge Fitzwater entered, see Dkt. No.
57; see also Dkt. No. 56 at 1 n.1 (“Plaintiff and defendant Allison Holland [] have
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agreed to a schedule governing expedited discovery and a Rule 34 examination of
computer systems. The court will enter an order that applies to Holland after plaintiff
and Holland comply with the court’s September 6, 2016 order.”), and as to Mbeteni, as
to whom Judge Fitzwater granted the Expedited Discovery Motion “based on
[KeyCorp’s] showing of good cause,” Dkt. No. 56 at 1.
In the Order as to Defendant Martin Mbeteni, the Court ordered that “Mbeteni
has 15 days from the date of this order to respond to plaintiff’s written discovery
requests already served” and that “Plaintiff may conduct Rule 34 forensic inspections
of Mbeteni’s computer networks, workstations, devices, and email accounts on notice
of seven business days” and that “Mbeteni shall facilitate plaintiff’s forensic expert to
do the following: A. Image the home computers of Mbeteni; B. Capture all webmail
accounts of Mbeteni; and C. Capture all mobile and personal devices of Mbeteni.” Id.
at 1-2.
The Court also previously entered a Stipulated Protective Order (the “SPO”) that
provides, among other things, that “[i]t governs any document, information, or other
thing furnished by any party to any other party”; that “[t]he protections conferred by
this Stipulation and Order cover not only Protected Material (as defined above), but
also (1) any information copied or extracted from Protected Material; (2) all copies,
excerpts, summaries, or compilations of Protected Material; and (3) any testimony,
conversations, or presentations by Parties or their Counsel that might reveal Protected
Material”; that “[t]he failure to designate any document or information as confidential
will not be deemed to waive a later claim as to its confidential nature, or to stop the
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producing party from designating such information as confidential at a later date in
writing and with particularity”; that “[i]nformation designated as Confidential
Information or Highly Confidential Attorneys’ Eyes Only Information may only be used
for purposes of preparation, trial, and appeal of this action”; that “[t]he existence of this
Protective Order must be disclosed to any person producing documents, tangible
things, or testimony in this action who may reasonably be expected to desire
confidential treatment for such documents, tangible things or testimony”; that “[a]ny
such person may designate documents, tangible things, or testimony confidential
pursuant to this Protective Order”; that “[t]he terms of this Order are applicable to
information produced by a Non-Party in this action and designated as
“CONFIDENTIAL” or “HIGHLY CONFIDENTIAL – ATTORNEYS’ EYES ONLY”; that
“[s]uch information produced by Non-Parties in connection with this litigation is
protected by the remedies and relief provided by this Order”; and that “[n]othing in
these provisions should be construed as prohibiting a Non-Party from seeking
additional protections.” Dkt. No. 13 at 4, 5, 7, 9-10.
The SPO further provides that “[t]he disclosure of privileged or work-product
protected documents, electronically stored information or information is not a waiver
of the privilege or protection from discovery in this case or in any other federal or state
proceeding” and that “[t]his Order shall be interpreted to provide the maximum
protection allowed by Federal Rule of Evidence 502(d).” Id. at 8.
In the Mbeteni MTC, KeyCorp sought an order compelling Mbeteni “to provide
complete responses to Key’s First Set of Requests for Admission and Interrogatories
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and First Set of Requests for Production of Documents within seven days of the filing
of this Motion in furtherance of the expedited discovery already ordered by the Court”
and “to produce all responsive documents and amend his formal responses” and
awarding KeyCorp “all expenses, including attorneys’ fees and costs, incurred in
connection with this Motion and the related discovery dispute.” Dkt. No. 77 at 1.
KeyCorp reported that on July 29, 2016, it “propounded the following on Mbeteni: 1)
Plaintiff’s First Set of Requests for Admission and Interrogatories and 2) Plaintiff’s
First Set of Requests for Production of Documents.” Id. at 3-4. KeyCorp contends that
“Mbeteni failed to produce any documents in response to Key’s Requests for
Production, failed to properly admit or deny a Request for Admission, and failed to
verify Answers to Interrogatories. Key’s attempts to resolve the dispute with Mbeteni
were unsuccessful.” Id. at 1. More specifically, KeyCorp reported that “Mbeteni
produced not a single document to [KeyCorp] and may be improperly withholding
documents” and that “Mbeteni failed to admit or deny Request for Admission No. 23,
and did not produce a verification of his Answers to Interrogatories.” Id. at 4. KeyCorp
requests that the “Court compel Mbeteni to immediately produce responsive
documents, clarify if he is withholding documents from production, admit or deny
Request for Admission No. 23, and produce Mbeteni’s verification of his Answers to
Interrogatories.” Id. at 3.
Following oral argument on the Mbeteni MTC, the Court ordered, in relevant
part, as follows:
KeyCorp explains that “Mbeteni produced no documents in
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response to [KeyCorp’s] Requests for Production of Documents,” “raised
no objection nor provided responsive documents to Document Request No.
1,” and, “[i]n response to Document Requests Nos. 5, 6, 8, and 11, ...
stated that the documents sought are already in [KeyCorp’s] possession
pursuant to the forensic inspection being performed in this case.” Dkt.
No. 77 at 5.
Mbeteni responds that he has “agreed to conform his responses and
has in fact served those conformed responses on Key Corp and all counsel,
on October 20, 2016 as promised” and therein “indicates that he has no
responsive documents in his possession but any responsive documents
may be found during the forensic inspection and will be produced in that
process.” Dkt. No. 82 at 3. According to Mbeteni, he “does not have any
responsive documents in his possession, custody or control other than
those subject to the current forensic inspection.” Id. at 5. Mbeteni
contends that KeyCorp’s motion to compel “should be denied because
Mbeteni indicates that he has no responsive documents in his possession
but any responsive documents may be found during the forensic
inspection and will be produced in that process but this response was not
satisfactory to Key on the basis of mere speculation.” Id.
In reply, KeyCorp asserts that “Mbeteni must comply with his
basic obligations to participate in discovery, and yet the way he moves the
target around makes it clear that he has not.” Dkt. No. 85 at 1.
....
Here, the Court’s orders permit KeyCorp to serve document
requests and, separately, to engage in forensic inspections. See Dkt. No.
56 at 1-2; Dkt. No. 57 at 1, 2. In the face of those orders, neither Holland
nor Mbeteni have shown that the discovery sought through the document
requests served on each of them is unreasonably cumulative or
duplicative or can be obtained from some other source that is more
convenient, less burdensome, or less expensive.
But the motivation for these motions to compel is to provide
documents in advance of depositions scheduled for the first days of
November, in advance of the November 11, 2016 submission date as to
KeyCorp’s preliminary injunction motion. The Consent Order as to
Holland provides that “Holland’s counsel shall provide Plaintiff’s counsel
with any and all objections to production, in writing, within 7 days after
the date upon which all such forensic inspection results have been
provided to Holland’s counsel.” Dkt. No. 57 at 3. At oral argument,
Holland’s counsel and KeyCorp’s counsel agreed that final word that data
from Holland’s iPhone would be inaccessible came down on October 24,
2016. The Court agrees with Holland’s counsel that Holland therefore has
until October 31, 2016 to comply with the requirements of paragraph 9
of the Consent Order [Dkt. No. 57].
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Holland’s counsel also affirmed to the Court at oral argument that,
as part of counsel’s review of “all documents and information imaged
and/or captured from Holland’s computer networks, workstations,
devices, and email accounts,” id. at 2, Holland’s counsel would review
those documents and information for responsive to KeyCorp’s First Set
of Requests for Production of Documents to Holland and would provide
KeyCorp with a document production and information as required by
Rule 34(b)(2)(E) by October 31, 2016. Mbeteni’s counsel likewise affirmed
that she is engaged in the same process and will, within the time frame
allowed for her review and objections to the copy of the documents, data,
and information that are the results of the searches run by KeyCorp’s
forensic expert, pursuant to the search protocol attached to KeyCorp’s
opposition [Dkt. No. 70-6], pursuant to KeyCorp’s forensic inspections of
Mbeteni’s computer networks, workstations, devices, and email accounts.
Under the circumstances, the Court will, pursuant to Rule 26(b)(1)
and 26(b)(2), order Holland and Mbeteni to review the documents and
information provided to them by KeyCorp’s forensic expert within the
time allowed by the relevant order [Dkt. Nos. 57 and 72], subject to any
extensions to which KeyCorp agrees, and to provide to KeyCorp the
documents and information as required by Rule 34(b)(2)(E) that is
responsive to KeyCorp’s First Set of Requests for Production of
Documents to each defendant, subject to any objections that have been
raised and are not overruled in this order, by the deadline provided for
objections under the relevant order [Dkt. Nos. 57 and 72].
Mbeteni and Holland otherwise have ongoing supplementation
obligations under Federal Rule of Civil Procedure 26(e)(1) to produce any
responsive documents or information within their respective possession,
custody, or control, and this order is entered without prejudice to
KeyCorp’s filing any future motion to compel.
Dkt. No. 87 at 20-24.
According to the Sanctions Motion, “[d]espite Key’s numerous good faith
attempts to complete discovery in this case, Mbeteni has refused to comply with his
discovery obligations”; “[h]e failed to comply with this Court’s Order of October 25,
2016 (Doc. No. 87) which, among other things, compelled Mbeteni’s production of
documents by no later than October 31, 2016”; “Mbeteni’s failure to comply with the
Order prevents Key from moving forward with this case, prevents Key from conducting
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a meaningful deposition of Mbeteni, and prevents Key from conducting a meaningful
deposition of Defendant Allison Holland”; and “Mbeteni’s foot-dragging has increased
the cost of this litigation in both dollars and time.” Dkt. No. 91 at 3. KeyCorp “requests
that this Court impose sanctions against Mbeteni, order appropriate compliance, and
order Mbeteni to pay costs incurred by his noncompliance.” Id.
According to KeyCorp, the October 26, 2016 Memorandum Opinion and Order
[Dkt. No. 87] “provides that, to facilitate his production of documents, Mbeteni would
– at his request – complete a review of documents generated through [KeyCorp’s]
forensic inspection of his computers, electronic devices, and webmail”; “[KeyCorp’s]
forensic consultant, BIA, had already made about 14,000 documents available to
Mbeteni through a web-based review platform”; “Mbeteni agreed – and the Court
ordered – that Mbeteni would finish reviewing the documents by October 31, coding
the documents that are responsive and not privileged”; but “Mbeteni did not produce
any documents to [KeyCorp] by the October 31, 2016 deadline.” Id. at 4.
KeyCorp further explains that, “[o]n October 31, 2016, [KeyCorp’s] forensic
expert, BIA, reported that as of that afternoon Mbeteni had reviewed just 735 of the
14,000 documents hosted in BIA’s database”; that, “[l]ater that day, at 8:25 p.m.
Eastern Time, Mbeteni communicated to BIA that Mbeteni had located 175 documents
to produce and wanted to start making a rolling production”; that, “[l]ater that night,
[KeyCorp] advised Mbeteni that Mbeteni had produced no documents in violation of
the Court’s Order, which was not surprising since Mbeteni had reviewed fewer than
1,000 documents out the 14,000 documents in the database”; and that KeyCorp
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“advised that it could not and would not depose Mbeteni on Friday, November 4, and
had already agreed with Holland to reschedule her deposition (due to Mbeteni’s
discovery delay).” Id. at 5 (emphasis removed).
According to KeyCorp, “[o]n November 1, 2016, Mbeteni produced Martin
Mbeteni’s First Rolling Production To [KeyCorp’s] Requests For Production (‘First
Rolling Production’), supplementing his response to Key’s Document Request No. 8
only, but produced no documents to Key,” and, “[a]ccording to the First Rolling
Production, ‘The specific documents with their control numbers as listed below shall
be turned over to counsel for KeyCorp through KeyCorp’s expert, BIA, as soon as BIA
can produce them electronically through Relativity. Any future information that is
responsive, shall be produced in the next rolling production on the 7th day from this
production ….’” Id. (emphasis removed).
Legal Standards
Federal Rule of Civil Procedure 37(b)(2)(A) provides that, “[i]f a party ... fails to
obey an order to provide or permit discovery, ... the court where the action is pending
may issue further just orders. They may include the following: (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; [or] (vi) rendering a default judgment against the disobedient
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party.” FED. R. CIV. P. 37(b)(2)(A)(i)-(vi). 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.”
FED. R. CIV. P. 37(b)(2)(C).
Rule 37(b) “empowers the courts to impose sanctions for failures to obey
discovery orders.” Smith & Fuller, P.A. v. Cooper Tire & Rubber Co., 685 F.3d 486, 488
(5th Cir. 2012). “Rule 37(b) clearly indicates that district courts have authority to grant
a broad spectrum of sanctions.” Chilcutt v. United States, 4 F.3d 1313, 1322 n.23 (5th
Cir. 1993). “The district court has broad discretion under Rule 37(b) to fashion
remedies suited to the misconduct.” Smith, 685 F.3d at 488 (internal quotation marks
omitted).
“This discretion, however, is limited” based on the type of sanctions imposed. Id.
“[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.” Id.
(internal quotation marks omitted); accord Nissho-Iwai Am. Corp. v. Kline, 845 F.2d
1300, 1304 (5th Cir. 1988) (“We have repeatedly emphasized that a dismissal with
prejudice is a ‘draconian’ remedy, or a ‘remedy of the last resort,’ to be employed only
when the failure to comply with the court's order results from wilfullness or bad faith
rather than from an inability to comply. Nevertheless, deliberate, repeated refusals to
obey discovery orders have been held to warrant the use of this ultimate sanction.”
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(footnote omitted)); Brinkmann v. Dallas Cty. Deputy Sheriff Abner, 813 F.2d 744, 749
(5th Cir. 1987) (explaining that, “if the refusal to comply results from honest confusion
or sincere misunderstanding of the order, the inability to comply, or the nonfrivolous
assertion of a constitutional privilege, dismissal is almost always an abuse of
discretion.”); Tech. Chem. Co. v. IG-LO Prod. Corp., 812 F.2d 222, 224 (5th Cir. 1987)
(“Entry of a default judgment is an appropriate sanction when the disobedient party
has failed to comply with a court order because of willfulness, bad faith, or other fault
on its part, as opposed to its inability to comply with the court's order.”); Batson v. Neal
Spelce Assocs., Inc., 765 F.2d 511, 514 (5th Cir. 1985) (“[D]ismissal is authorized only
when the failure to comply with the court's order results from wilfulness or bad faith,
and not from the inability to comply.”).
But “[l]esser sanctions do not require a finding of willfulness.” Smith, 685 F.3d
at 488. “Of course, the flagrancy of a party’s behavior must be directly proportionate
to the severity of the sanction imposed,” but “the lack of willful, contumacious, or
prolonged misconduct [does not] prohibit[] all sanctions.” Chilcutt, 4 F.3d at 1322 n.23.
Even where a party was “unable to comply with the discovery requests, the district
court still ha[s] broad discretion to mete out a lesser sanction than dismissal.”
Id. (emphasis removed). That is because “the type of conduct displayed by a party had
no bearing on whether sanctions should be imposed, but only on the type of sanctions
imposed,” and “[t]he willfulness or good faith of [a party], can hardly affect the fact of
noncompliance and [is] relevant only to the path which the District Court might follow
in dealing with [the party’s] failure to comply.” Id. (internal quotation marks omitted;
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emphasis removed).
Rule 37(b) “is designed to empower the court to compel production of evidence
by the imposition of reasonable sanctions.” Dorsey v. Acad. Moving & Storage, Inc., 423
F.2d 858, 860 (5th Cir. 1970). “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). Rule 37(b)(2) sanctions “must be both just and specifically related to the
claim at issue in the discovery order.” Vicknair v. Louisiana Dep’t of Pub. Safety &
Corr., 555 F. App’x 325, 332 (5th Cir. 2014).
Analysis
KeyCorp contends that “Mbeteni violated the [October 26, 2016 Memorandum
Opinion and Order] by failing to produce documents” even though “Mbeteni was well
aware of the October 31, 2016 deadline for providing documents to Key,” where “this
date was discussed and agreed to at the October 25, 2016 hearing and was made clear
in the [October 26, 2016 Memorandum Opinion and Order].” Dkt. No. 91 at 7. KeyCorp
further asserts that “the October 31 deadline was more than a month after Mbeteni
should have produced these documents pursuant to the 15-day time frame originally
set forth in the Court’s September 15, 2016 order granting Key’s Motion for Expedited
Discovery and Rule 34 examination of computer systems as to Mbeteni (Doc. No. 56)”
and that “Mbeteni has had sufficient notice and time to comply with the [October 26,
2016 Memorandum Opinion and Order].” Id.
According to KeyCorp, “Mbeteni’s failure to produce documents has produced a
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domino effect throughout the rest of the discovery process,” where KeyCorp “is entitled
to – and needs to – receive Mbeteni’s documents to adequately prepare for Mbeteni’s
deposition” and where “not having Mbeteni’s documents limits [KeyCorp’s] ability to
prepare for Holland’s deposition,” such that “[n]ot having these depositions ruins
[KeyCorp’s] ability to prepare for the submission date of the [Motion for Preliminary
Injunction (Doc. No. 23)]” and, “[q]uite simply, Mbeteni’s violation of the Order is
holding up this entire case.” Id. at 7-8.
KeyCorp finally contends that, “because Mbeteni’s conduct is clearly deliberate
and willful, [KeyCorp] is entitled to a monetary sanction, and fees and expenses
incurred due to Mbeteni’s failure to comply with the [October 26, 2016 Memorandum
Opinion and Order].” Id. at 8. KeyCorp asserts that “Mbeteni’s conduct is simply
inscrutable”; that “Mbeteni continues to delay the discovery”; that “Mbeteni tried to
sidetrack discovery since the beginning of this case” but now “Mbeteni is under the
Order of the court”; and that “[h]is continuing intransigence seems purposeless”; but
that, “[w]hatever Mbeteni’s purpose or motive, the Court should enforce the [October
26, 2016 Memorandum Opinion and Order], compel Mbeteni’s compliance, and impose
sanctions against him.” Id.
Mbeteni responds that the Sanctions Motion “is not properly before the court
and should be stricken” and that he “opposes Plaintiff’s Motion for Sanctions and
asserts that KeyCorp should be sanctioned for making the intentional misstatements
in this motion for the sole purpose of drawing the court’s attention away from its
failure to participate in the scheduling conference and inability to conduct the
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expeditiously requested depositions.” Dkt. No. 99 at 1. More specifically, Mbeteni
contends that he “is working assiduously to comply with all orders of this court and to
work within the agreements of all parties”; that, “[t]o this end, on October 31, 2016,
Mbeteni designated to BIA – KeyCorp’s experts, 2714 pages of documents for
production to KeyCorp but BIA could not produce the documents until Chad Cooper –
Counsel for KeyCorp gave the go ahead to produce”; and that “KeyCorp refused to
accept production until November 3rd after it had filed this” Sanctions Motion. Id. at
1-2.
According to Mbeteni, “KeyCorp filed the Motion for Sanctions because Mbeteni
refused to agree to Plaintiff’s unilateral cancellation of the deposition or to participate
in the slew of unplanned and hair-brained Motions to ‘Amend/Correct’ which KeyCorp
has filed in flights of fancy within the last 8 days.” Id. at 2. And Mbeteni asserts that
the Court’s October 26, 2016 Memorandum Opinion and Order [Dkt. No. 87] “required
the parties to complete the forensic review in accordance with previous orders or as
agreed to by the parties”; that “KeyCorp agreed to extend time for Martin Mbeteni to
complete the review and for Martin Mbeteni to commence a rolling production”; that
“Mbeteni commenced a rolling production by designation on October 31st, 2016 but
KeyCorp refused to authorize its expert to begin the production of the documents until
it had filed this frivolous and harassing motion”; and that “[i]t was not Martin Mbeteni
who refused to produce documents but KeyCorp that refused to accept production until
November 3rd, 2016.” Id. at 3.
KeyCorp replies that it “complied with the conference requirement set forth in
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Local Rule 7.1(b) by seeking a resolution with Mbeteni before filing the” Sanctions
Motion and that “Mbeteni has fabricated an agreement with [KeyCorp] ‘to extend time
for Martin Mbeteni to complete the review and for Martin Mbeteni to commence a
rolling production,’” where KeyCorp “has never agreed to extend Mbeteni’s deadline for
making a complete production beyond October 31, 2016, and [KeyCorp] has never
agreed to a ‘rolling production’ with no end in sight.” Dkt. No. 102 at 3, 5.
After carefully considering the parties submissions in connection with the
Sanctions Motion and the undersigned’s own familiarity with the proceedings leading
up to the orders on the Motion for Protective Order in Favor of Lularoe for U by Ebonie
and Jennifer™ or to Modify/limit the Order [Document 56] Scheduled to Be Enforced
on October 4, 2016 [Dkt. No. 65], KeyCorp’s Motion to Compel Defendant Holland's
Responses to Plaintiff's Discovery Requests [Dkt. No. 76], and KeyCorp's Motion to
Compel Defendant Mbeteni's Responses to Plaintiff's Discovery Requests [Dkt. No. 77],
the Court determines that Mbeteni has violated the Court’s October 26, 2016
Memorandum Opinion and Order [Dkt. No. 87] by failing to complete to fully “review
the documents and information provided to them by KeyCorp’s forensic expert within
the time allowed by the relevant order [Dkt. Nos. 57 and 72], subject to any extensions
to which KeyCorp agrees, and to provide to KeyCorp the documents and information
as required by Rule 34(b)(2)(E) that is responsive to KeyCorp’s First Set of Requests
for Production of Documents to” Mbeteni by October 31, 2016. Dkt. No. 87 at 24.
The record does not support Mbeteni’s assertion that KeyCorp extended the
October 31 deadline, where Mbeteni reports that an agreement to a rolling production
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beyond that date was apparently reached during the October 25, 2016 oral argument.
But no such agreement was reached during that oral argument, in which KeyCorp’s
counsel participated only by telephone, and, in any event, the Court’s October 26, 2016
Memorandum Opinion and Order [Dkt. No. 87] did not order or authorize Mbeteni to
comply beyond October 31, 2016. That order made clear that “the Court’s orders permit
KeyCorp to serve document requests and, separately, to engage in forensic
inspections”; that, “[i]n the face of those orders, neither Holland nor Mbeteni have
shown that the discovery sought through the document requests served on each of
them is unreasonably cumulative or duplicative or can be obtained from some other
source that is more convenient, less burdensome, or less expensive”; and that Mbeteni
would be permitted to review and produce, by October 31, from the search results from
the forensic image only because “the motivation for these motions to compel is to
provide documents in advance of depositions scheduled for the first days of November,
in advance of the November 11, 2016 submission date as to KeyCorp’s preliminary
injunction motion.” Id. at 22, 23.
Under these circumstances, the Court finds that Mbeteni violated the Court’s
October 26, 2016 Memorandum Opinion and Order [Dkt. No. 87], without substantial
justification, by failing to fulfill his discovery obligations by October 31 as this Court
ordered him to do (and as his counsel committed to doing at the October 25 oral
argument) and that Rule 37(b)(2) sanctions that are just and specifically related to the
matter at issue in the discovery order are warranted.
The Court further determines that KeyCorp adequately conferred before filing
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the Sanctions Motion and that further conferring would not have avoided the need for
the motion where Mbeteni disagreed that he was out of compliance with the Court’s
order and would not agree to proposals to extend deadlines and move depositions to
avoid the need for filing the motion. And the Court determines that, on this record and
under the circumstances, there is no basis for sanctions against KeyCorp. Any
unhappiness or frustration that Mbeteni may have at KeyCorp’s having sued him,
seeking preliminary injunctive relief, and seeking (and having obtained) authorization
for expedited discovery have no bearing on what the Court’s October 26, 2016
Memorandum Opinion and Order [Dkt. No. 87] required and whether Mbeteni has
complied with that discovery order. Neither does KeyCorp’s having filed motions to
extend certain deadlines. As to Mbeteni’s suggestion that KeyCorp should be
sanctioned based on the parties’ not having conferred on s scheduling proposal, the
Court further notes that KeyCorp’s request to extend the due date for the parties’
scheduling proposal has now been granted. See Dkt. No. 101.
The Court determines that the least severe sanction adequate to achieve Rule
37(b)(2)’s purposes of reimbursing KeyCorp and deterring violations of the Court’s
discovery orders is to order (1) that Defendant Martin Mbeteni must produce all
responsive documents as ordered in the Court’s October 26, 2016 Memorandum
Opinion and Order [Dkt. No. 87] by no later than November 21, 2016, in order to
permit depositions of Defendants Martin Mbeteni and Allison Holland by December
14, 2016; (2) that Section 4 of the September 15, 2016 Consent Order Granting Motion
for Expedited Discovery & Motion for Rule 34 Examination of Computer Systems as
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to Defendant Allison Holland [Dkt. No. 57] is amended to provide that the Motion for
Preliminary Injunction [Dkt. No. 23] shall be deemed submitted for decision on
December 19, 2016; and (3), finding that no other circumstances make an award of
expenses unjust, that Defendant Martin Mbeteni’s counsel must pay the reasonable
expenses, including attorneys’ fees, that Plaintiff KeyCorp incurred in preparing and
filing of its Motion for Sanctions Against Defendant Martin Mbeteni [Dkt. No. 91].
Northern District of Texas Local Civil Rule 7.1 requires that parties confer
before filing an application for attorneys’ fees. KeyCorp’s counsel and Mbeteni’s counsel
are directed to confer by telephone about the reasonable amount of these attorneys’
fees and costs to be awarded under Rule 37(b)(2)(C) as outlined above. Any attorney
refusing to confer as directed will be subject to sanctions.
By no later than December 28, 2016, KeyCorp and Mbeteni must file a joint
status report notifying the Court of the results of the conference. If all disputed issues
as to the amount of attorneys’ fees and costs to be awarded to KeyCorp have been
resolved, KeyCorp’s counsel must also send an agreed proposed order to the Court at
[e-mail] by December 28, 2016.
If the parties do not reach an agreement as to the amount of attorneys’ fees and
costs to be awarded to KeyCorp , KeyCorp must, by no later than January 4, 2017, file
an application for attorneys’ fees and costs that is accompanied by supporting evidence
establishing the amount of the attorneys’ fees and costs (as described above) to be
awarded under Rules 37(b)(2)(C). The fee application must be supported by
documentation evidencing the “lodestar” calculation, including affidavits and detailed
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billing records, and citations to relevant authorities and shall set forth the itemized
number of hours expended in connection with the recoverable attorneys’ fees described
above as well as the reasonable rate(s) requested. 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).
If an application is filed, Mbeteni must file any response by January 25, 2017,
and KeyCorp must file any reply by February 8, 2017.
Conclusion
For the reasons and to the extent explained above, the Court GRANTS Plaintiff
KeyCorp’s Motion for Sanctions Against Defendant Martin Mbeteni [Dkt. No. 91].
SO ORDERED.
DATED: November 10, 2016
_________________________________________
DAVID L. HORAN
UNITED STATES MAGISTRATE JUDGE

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