Tibbs et al v. Vaughn et al
Filing
166
ORDER granting 150 Motion for Scheduling Order (Third Amended Scheduling order will be issued after entry of the instant order); granting in part and denying in part 152 Motion for Sanctions. See order for further details. Signed by Magistrate Judge Paul M. Warner on 9/28/2012. (srs)
IN THE UNITED STATES DISTRICT COURT DISTRICT OF UTAH
CENTRAL DIVISION
TOM TIBBS, et al.,
MEMORANDUM DECISION
AND ORDER
Plaintiffs,
v.
Case No. 2:08cv787
JASON K. VAUGHN, et al.,
Defendants.
District Judge Tena Campbell
Magistrate Judge Paul M. Warner
This matter was referred to Magistrate Judge Paul M. Warner by District Judge Tena
Campbell pursuant to 28 U.S.C. § 636(b)(1)(A).1 Before the court is Tom Tibbs, Peggy Tibbs,
and Home Advantage, LLC’s (collectively, “Plaintiffs”) (1) motion for sanctions and to strike
pleadings2 and (2) motion to amend the second amended scheduling order.3 The court has
carefully reviewed the memoranda submitted by the parties. Pursuant to civil rule 7-1(f) of the
United States District Court for the District of Utah Rules of Practice, the court elects to
determine the motion on the basis of the written memoranda and finds that oral argument would
not be helpful or necessary. See DUCivR 7-1(f).
1
See docket no. 117.
2
See docket no. 152.
3
See docket no. 150.
I. Motion for Sanctions and to Strike Pleadings
Plaintiffs move this court to sanction Jason K. Vaughn (“Mr. Vaughn”) and Melanie F.
Vaughn (“Ms. Vaughn”) (collectively, “Defendants”) by striking their answer and entering
default judgment against them for failing to obey multiple court orders compelling Defendants to
cooperate in discovery. Specifically, Plaintiffs allege that they have repeatedly attempted to
obtain responses to their discovery requests (both with and without court intervention) to no avail
and that striking Defendants’ answer and entering default judgment is the appropriate sanction.
A. Relevant Background
On February 3, 2011, Plaintiffs served Defendants separate First Set of Interrogatories,
Requests for Production of Documents, and Requests for Admissions by regular mail, as well as
by email. On February 5, 2011, Defendants replied to the email and requested that “all postal
correspondence” was now to be sent to an address on Main Street. Thus, on February 7, 2011,
Plaintiffs’ counsel mailed the discovery requests to that Main Street address.
On March 22, 2011, Mr. Vaughn responded to Plaintiffs’ discovery requests by merely
identifying documents he had earlier produced to the Federal Bureau of Investigation in a
criminal case against Rick Koerber (“Koerber criminal case”), another defendant in this civil
case. Mr. Vaughn did not, however, provide any of the requested documents to Plaintiffs. On
March 23, 2011, Ms. Vaughn responded to Plaintiffs’ discovery requests asserting that she did
not have any documents in her possession that would responsive to the requests.
On February 22, 2011, Plaintiffs’ counsel noticed depositions of Defendants for March
29, 2011, and sent the notice to both Mr. Vaughn’s email address as well as the Main Street
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address. Between February 22 and March 28, Plaintiffs’ counsel and Defendants exchanged
several emails. Plaintiffs’ counsel repeatedly reminded Defendants of the upcoming depositions.
However, Defendants failed to appear for their depositions on March 29, 2011.
On April 11, 2011, Plaintiffs filed a motion to compel discovery, to which Defendants
failed to respond. On May 11, 2011, the court granted Plaintiffs’ motion to compel and ordered
Defendants to provide the requested discovery within thirty days of the date of that order.
Instead, on May 17, 2011, Mr. Vaughn filed a motion to stay and for a protective order. Mr.
Vaughn asserted that because he was likely under criminal investigation for the activities related
to this civil matter and the Koerber criminal case, requiring him to defend himself here could
implicate his Fifth Amendment right against self-incrimination in the investigation.
On June 14, 2011, counsel for Plaintiffs sent an email and letter to Ms. Vaughn informing
her that she was in violation of the court’s order and stating she is subject to sanctions, including
the striking of the answer and entry of judgment against her. On June 23, 2011, Ms. Vaughn
responded to the interrogatories with one sentence: “Melanie F. Vaughn is without knowledge
sufficient to answer any of the interrogatories.”4
On June 27, 2011, Plaintiffs filed a motion for sanctions against Ms. Vaughn for failing
to obey the court’s order compelling her to respond to discovery. On November 17, 2011, this
court issued a memorandum decision and order on (1) Mr. Vaughn’s motion to stay and for a
protective order and (2) Plaintiffs’ motion for sanctions against Ms. Vaughn. The court denied
4
Docket no. 153 at 8.
3
Mr. Vaughn’s motion to stay and for a protective order and granted Plaintiffs’ motion for
sanctions against Ms. Vaughn.5 When ruling on the proper amount of the sanction award, this
court noted that the discovery deadline was approaching and encouraged Defendants to
participate in discovery and to appear for their depositions scheduled for January 20, 2012.6
While Defendants both appeared for their depositions, they have yet to produce a single
document in response to Plaintiffs’ document requests, despite being ordered to do so. Mr.
Vaughn has not provided any written answers to the interrogatories served upon him, and Ms.
Vaughn has only provided a single sentence and a single paragraph response stating that she is
unable to answer any of the interrogatories or provide documents. When asked about
Defendants’ delinquent discovery responses at Ms. Vaughn’s deposition, Ms. Vaughn stated,
“I’ll get to it when I can. I’m very busy.”7
On April 27, 2012, this issued an order to show cause why Plaintiffs’ motion to strike
Defendants’ answer should not be granted and default judgment entered against them.8
Defendants filed a timely response to the order to show cause on May 18, 2012. In their
response, Defendants argue that they are “innocent of the fraud and securities violations” alleged
against them in this matter and believe that a jury would agree with them if they were allowed to
5
See docket no. 143.
6
See docket no. 149.
7
Docket no. 153, Exhibit H, at 25.
8
See docket no. 157.
4
present a defense.9 Defendants further assert that they have been unable to retain counsel. While
Defendants argue that they have done their best to respond to orders of the court and the
discovery requests of Plaintiffs, the whole process has been very difficult and confusing
especially now that Mr. Vaughn has been indicted on two counts of Wire Fraud, one count of
Money Laundering, and one court of Interstate Transportation of Money Obtained by Fraud.10
Defendants concluded by requesting a continuance of sixty days in which to “sort out” their
concerns.11
Exactly sixty-one days later, Defendants filed additional motions to stay this case pending
the resolution of Mr. Vaughn’s criminal case.12 Earlier today, this court issued a memorandum
decision and order denying those motions to stay.13
B. Analysis
Rule 37(b)(2) of the Federal Rules of Civil Procedure provides, in relevant part, when “a
party . . . fails to obey an order to provide or permit discovery . . . the court may . . . strik[e]
pleadings in whole or in part . . . [or] render[] a default judgment against the disobedient party.”
Fed. R. Civ. P. 37(b)(2)(A). Although dismissal is a drastic sanction, it is appropriate in cases of
willful misconduct. See Ehrenhaus v. Reynolds, 965 F.2d 916, 920 (10th Cir. 1992); Whatcott v.
9
Docket no. 159 at 1.
10
See USA v. Vaughn, Case No. 2:12-cr-219.
11
Id. at 2.
12
See docket no. 160, 161.
13
See docket no. 165.
5
City of Provo, 231 F.R.D. 627, 631 (D. Utah 2005). The Tenth Circuit has identified five factors
a court should consider before dismissing an action:
(1) the degree of actual prejudice to the defendant; (2) the amount of interference
with the judicial process; . . . (3) the culpability of the litigant . . . ; (4) whether the
court warned the party in advance that dismissal of the action would be a likely
sanction for noncompliance . . . ; and (5) the efficacy of lesser sanctions.
Ehrenhaus, 965 F.2d at 921 (quotations and citations omitted). “[S]ome of these factors will
take on more importance than others.” Id. at 922. “Determination of the correct sanction for a
discovery violation is a fact-specific inquiry that the district court is best qualified to make.” Id.
at 920.
Here, Plaintiffs argue that Defendants have willfully refused to cooperate in the discovery
process and have obfuscated the necessary elements of Plaintiffs’ case by this willful refusal.
Plaintiffs contend that for over a year, Defendants have done very little to provide the necessary
information to which Plaintiffs are entitled. Plaintiffs further assert that Defendants have
interfered with the judicial process by failing to cooperate in discovery after Plaintiffs’ repeated
good faith efforts to obtain it and by failing to comply with the courts’ orders.
The court is sympathetic to Plaintiffs’ frustration and agrees that Defendants’ conduct
appears to be willful. However, considering Defendants’ pro se status, the court is unwilling to
recommend striking Defendants’ answer and entering default against them as a sanction at this
time. That said, the court believes that the lesser sanction of attorney fees and costs are
warranted here and GRANTS Plaintiffs’ motion for sanctions.
6
Rule 37 of the Federal Rules of Civil Procedure governs sanction awards for failure to
cooperate in discovery. It provides in relevant part:
If the motion is granted--or if the disclosure or requested discovery
is provided after the motion was filed--the court must, after giving
an opportunity to be heard, require the party or deponent whose
conduct necessitated the motion, the party or attorney advising that
conduct, or both to pay the movant’s reasonable expenses incurred
in making the motion, including attorney’s fees. But the court
must not order this payment if: (i) the movant filed the motion
before attempting in good faith to obtain the disclosure or
discovery without court action; (ii) the opposing party’s
nondisclosure, response, or objection was substantially justified; or
(iii) other circumstances make an award of expenses unjust.
Fed. R. Civ. P. 37(a)(5)(A). Upon review of the Plaintiffs’ motion and memoranda, the court
concludes that (1) Plaintiffs attempted in good faith to obtain the requested discovery without
resorting to court intervention, (2) Defendants’ repeated failure to provide discovery was not
substantially justified, and (3) there are not other circumstances that would make such an award
unjust. See id.
The court has determined that Plaintiffs are entitled to an award of sanctions against
Defendants under rule 37(a)(5)(A). At the same time, the court recognizes that before any
sanctions can be imposed against Defendants under rule 37(a)(5)(A), they must be provided with
an opportunity to be heard on that issue. See id. In order to fully inform the court, and to provide
Defendants with the requisite opportunity to be heard, the parties are directed to make the
following filings. By October 10, 2012, Plaintiffs’ shall file with the court an affidavit and cost
memorandum detailing the reasonable expenses, including attorney fees, incurred in bringing the
instant motion. By October 19, 2012, Defendants shall file written memoranda responding to
7
Plaintiffs’ affidavit that details their position on the issue of attorneys fees. After receipt of those
filings, the court will make a final determination concerning the award of sanctions against
Defendants.
In addition, Defendants are ordered to fully respond to all outstanding discovery requests
no later than October 31, 2012. After providing full and adequate responses to the outstanding
discovery, Defendants are further ordered to participate in another deposition to be scheduled at a
mutually convenient time. The depositions shall take place no later than November 30, 2012.
Should Defendants fail to respond in full to the discovery or fail to cooperate in any way with the
scheduling of or participation in the depositions, this court will recommend that Defendants’
answer be stricken and default judgment entered against them. Absent very compelling
circumstances, the court will not alter this schedule.
II. Plaintiffs’ Motion for a Third Amended Scheduling Order
Plaintiffs seek to amend the scheduling order in this matter for a third time based on
Defendants’ refusal to cooperate in discovery. Defendants’ have not filed a response to
Plaintiffs’ motion and the time for doing so has passed. See DUCivR 7-1(b)(4)(B); see also
DUCivr 7-1(d) (“Failure to respond timely to a motion may result in the court’s granting the
motion without further notice.”). Accordingly, and for the reasons set forth above and in
Plaintiffs’ motion and supporting memorandum, Plaintiffs’ motion to amend is GRANTED.
Upon entry of the instant order, the court will issue a third amended scheduling order to govern
this matter that takes in to consideration the dates set forth above.
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III. Conclusion
Based on the foregoing, IT IS HEREBY ORDERED that:
(1) Plaintiffs’ motion for sanctions and to strike pleadings is GRANTED IN PART
AND DENIED IN PART. Plaintiffs are awarded sanctions in an amount to be determined upon
the filing of the ordered submissions. At this time, the court declines to recommend the striking
of Defendants’ answer and the entry of default against them.
(2) Plaintiffs’ motion to amend the second amended scheduling order is GRANTED.
Upon entry of the instant order, the court will issue a third amended scheduling order.
IT IS SO ORDERED.
DATED this 28th day of September, 2012.
BY THE COURT:
PAUL M. WARNER
United States Magistrate Judge
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