Leach Farms Inc v. Ryder Integrated Logistics Inc

Filing 52

DECISION AND ORDER signed by Judge Lynn Adelman on 1/26/15 denying 46 , 48 Motions for Sanctions. (cc: all counsel) (dm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
LEACH FARMS, INC.,
Plaintiff,
v.

Case No. 14-C-0001

RYDER INTEGRATED LOGISTICS, INC.,
Defendant.

DECISION AND ORDER
In this decision and order, I address two motions for sanctions filed by the plaintiff,
Leach Farms, Inc., against the defendant, Ryder Integrated Logistics, Inc., and its counsel.
The first motion requests sanctions for Ryder’s failure to produce a properly prepared
witness in response to Leach’s Rule 30(b)(6) deposition notice. The second motion
requests sanctions for Ryder’s counsel’s refusal to agree to search terms in electronic
discovery.
I described the background facts of this case in an earlier order. See Leach Farms,
Inc. v. Ryder Integrated Logistics, Inc., No. 14-C-0001, 2014 WL 4267455 (E.D. Wis. Aug.
28, 2014). For purposes of the present motion, it is enough to note that Leach alleges that
Ryder breached a contract for processing and storing celery.
A.

Sanctions for failing to properly prepare Rule 30(b)(6) deponent
Federal Rule of Civil Procedure 30(b)(6) allows a party seeking discovery from an

organization to name the organization as the deponent and “describe with reasonable
particularity the matters for examination.” In response, the organization must designate
the person or persons who will testify on its behalf. The Rule requires that the persons

designated be able to testify “about information known or reasonably available to the
organization.” Several courts have determined that Rule 30(b)(6) imposes an affirmative
duty on the organization to prepare the designated person or persons so that they can give
full, complete, and non-evasive answers to the questions posed. 7 James Wm. Moore,
Moore’s Federal Practice–Civil § 30.25[3] (3d ed. 2014). Courts have also determined that
if it becomes apparent that a designated deponent cannot satisfy the deposition notice, the
organization has a duty to substitute another person. Id.
In the present case, Leach served a Rule 30(b)(6) deposition notice on Ryder
requesting testimony on ten topics. Ryder designated Bob Rasmussen as the deponent.
Leach contends that at the deposition, it became apparent that Rasmussen was not fully
prepared to testify on two of the topics, namely, the negotiation of the parties’ agreement
and Ryder’s understanding of its terms. The portions of the deposition transcript Leach
cites in its motion indicates that Rasmussen was able to answer some questions on these
topics. However, when Leach asked Rasmussen certain questions about how the written
agreement was prepared, Rasmussen testified that “Business Development,” which is
apparently a division of Ryder that Rasmussen was not part of, prepared the agreement.
Rasmussen stated that he could not answer questions about matters that fell within
Business Development’s domain. See Rasmussen Dep. at 51:24 to 58:21.
Once it became apparent that Rasmussen’s knowledge of the preparation of the
agreement did not fully exhaust Ryder’s knowledge of that subject, Ryder agreed to
produce a substitute witness. This witness turned out to be John Peters, Ryder’s Vice
President of Business Operations. (I assume that “Business Operations” is what
Rasmussen was referring to when he said “Business Development.”) When Leach
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deposed Peters, Peters testified that Rasmussen was mistaken about Business
Development’s involvement in the preparation of the parties’ written agreement. Peters
testified that after he reviewed Rasmussen’s deposition and saw what Rasmussen had
mistakenly attributed to Business Development, he talked to Rasmussen, and then
Rasmussen concluded that he probably had handled all of the document preparation after
all. See Peters Dep. at 55–56. Although Peters was not involved in the preparation of the
written contract, he was able to answer Leach’s questions on other matters.
Having deposed both Rasmussen and Peters, Leach is apparently satisfied that it
has exhausted Ryder’s knowledge concerning the negotiation of the agreement and
Ryder’s understanding of it. However, Leach has filed the present motion for sanctions
under Federal Rule of Civil Procedure 37(d)(1), contending that because Rasmussen was
not fully prepared to answer questions on the designated topics, Ryder should be required
to pay the $11,690 in costs and attorneys’ fees that Leach incurred in preparing for and
taking Peters’s deposition.
Cases hold that sanctions under Rule 37(d)(1) may be imposed when a
corporation’s failure to properly prepare a Rule 30(b)(6) deponent is “tantamount to a
complete failure of the corporation to appear.” Resolution Trust Corp. v. Southern Union
Co., Inc., 985 F.2d 196, 197 (5th Cir. 1993). However, other cases recognize that this rule
does not mean that a corporation is subject to sanctions whenever a designated
deponent’s lack of preparation leaves him unable to answer some questions on a topic.
Costa v. County of Burlington, 254 F.R.D. 187, 190 (D.N.J. 2008) (collecting cases). As
one court has noted, Rule 30(b)(6) does not call for “absolute perfection in preparation.”
Wilson v. Lakner, 228 F.R.D. 524, 528 (D. Md. 2005).
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In the present case, Rasmussen’s preparation probably fell a little bit short. If he
believed that Business Development was responsible for preparing the written contract, he
should have interviewed employees from that department or reviewed their documents so
that, at the deposition, he could fully convey Ryder’s knowledge on those matters. If
Rasmussen had done that in this case, he likely would have realized that he was mistaken
in thinking that Business Development had prepared the contract. However, I cannot say
that the defects in Rasmussen’s preparation were so severe that Ryder’s producing him
for the deposition was tantamount to a complete failure to appear. Rasmussen was fully
prepared to answer questions on eight of the ten designated topics, and he was able to
answer some questions on the remaining topics. Moreover, once Rasmussen’s lack of
knowledge became apparent, Ryder agreed to produce a substitute witness who was able
to provide the missing information, and thus Leach eventually obtained all of the discovery
to which it was entitled. Under these circumstances, I conclude that sanctions are not
warranted.
I also note that even if sanctions were warranted, I would not award Leach the full
cost of preparing for and taking Peters’s deposition. Rule 30(b)(6) allows an organization
to designate more than one person to supply testimony on the requested topics, and thus
Ryder had the option of designating both Rasmussen and Peters as responsive witnesses
from the beginning. Had Ryder done so, Leach would have had to incur the cost of
preparing for and taking two depositions instead of one. Because Ryder waited until after
Rasmussen’s deposition to designate Peters, Leach probably incurred some costs and
attorneys’ fees that it could have avoided had it known from the start that it would have to
depose both men.

For example, Leach could have coordinated the depositions to
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minimize travel costs and preparation time. But Leach would have had to incur much of
the expenses associated with Peters’s deposition even if Ryder had perfectly complied with
its obligations under Rule 30(b)(6) by immediately designating both Rasmussen and Peters
as responsive witnesses. Thus, any sanction for Ryder’s failing to either properly prepare
Rasmussen or designate Peters from the outset should be limited to the additional costs
and attorneys’ fees incurred because of Ryder’s untimely designation of Peters.
B.

Sanctions for failure to agree to search terms
Next, Leach seeks sanctions under 28 U.S.C. § 1927 against Ryder’s counsel,

alleging that counsel’s refusal to agree to search terms for searching a database of
Leach’s emails was unreasonable and vexatious.
In the course of discovery, Ryder requested that Leach produce emails involving
discussions about Leach’s dealings with its customers following Ryder’s alleged breach of
contract. In responding to this request, Leach advised Ryder’s counsel that it had used
search strings consisting of customer names conjoined with certain additional terms. After
Ryder reviewed the emails that Leach had produced using these search strings, Ryder
concluded that the strings likely did not capture all responsive documents. Ryder’s counsel
asked Leach to repeat its search using only customer names as the search terms. Leach
objected to this request on the ground that the search would generate thousands of
irrelevant and duplicative documents. However, Leach decided to proceed with the search
that Ryder had requested rather than file a motion for a protective order. In responding to
Ryder’s request for an expanded search, Leach notified Ryder’s counsel of its intent to
seek sanctions under § 1927.
Leach made the results of its expanded search available to Ryder’s counsel through
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an electronic database. The database contained 16,102 documents, comprising about
40,000 to 50,000 pages. Ryder’s lawyers then asked Leach to modify the database so that
they could use search terms while inspecting the documents. Leach did so. After Ryder’s
lawyers completed their search of the database, Leach went back in and took a peek at
the results of the inspection. Leach was able to determine that Ryder’s lawyers had
opened only 4,107 of the 16,102 documents in the database. That is, Ryder’s lawyers had
viewed only 25% of the documents Leach had produced.
Leach contends that if Ryder’s lawyers were able to use search terms to winnow
their search of the documents down to only 25% of those produced, they should have
agreed to allow Leach to use those same terms when making its expanded production.
Had Ryder done so, Leach contends, the cost of locating, reviewing, and producing the
documents comprising the expanded production would have been lower. Leach argues
that Ryder’s counsel’s refusal to agree to search terms in advance was unreasonable and
vexatious, and that therefore counsel should be held personally liable under § 1927 for the
excess costs and attorneys’ fees that Leach reasonably incurred because of that refusal.
Leach’s argument assumes that Ryder’s lawyers performed only a single search of
the database and reviewed only the documents retrieved by that one search. If that is what
happened, then Leach could plausibly claim that Ryder’s refusal to allow Leach to use
Ryder’s terms during the production stage was unreasonable. But Ryder’s counsel
explains that he used “multiple, evolving searches, which were refined as the document
review progressed.” Resp. Br. at 2. Leach likely would have objected to performing
repeated searches of the email database as Ryder’s counsel learned more after reviewing
the results of each search. And even if Leach would have agreed to perform multiple
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searches, that process would have been cumbersome and likely have led to delay. For
these reasons, I conclude that Ryder’s counsel’s refusal to agree to search terms in
advance is not sanctionable.
CONCLUSION
For the reasons stated, IT IS ORDERED that Leach’s motions for sanctions are
DENIED.
Dated at Milwaukee, Wisconsin, this 26th day of January, 2015.

s/ Lynn Adelman
_____________________________
LYNN ADELMAN
District Judge

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