ENTRY ON OBJECTION TO ENTRY ON MOTION TO COMPEL

JOHN TINDER, District Judge

This case involves a dispute over a real estate lease agreement with an option to purchase. It comes before the court on the Defendants/Counter Plaintiffs' Objection to Entry on Defendants' Motion to Compel Disclosure.

I. Discussion

Magistrate Judge Baker's Entry on Defendants' Motion to Compel Discovery rules on nondispositive matters. A magistrate judge's order on a nondispositive matter may not be set aside or modified by the district judge unless the order is "clearly erroneous or contrary to law." Fed.R.Civ.P. 72(a). An order is "clearly erroneous" only if the district court "on the entire evidence is left with the definite and firm conviction that a mistake has been committed." United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948); see also United States v. Spruill, 296 F.3d 580, 591 (7th Cir. 2002) (quotation omitted).

The Defendants' motion to compel discovery and disclosure requests an order compelling the Plaintiff to amend and supplement its initial disclosures to disclose the information required by Fed.R.Civ.P. 26(a)(1) and to immediately designate, prepare and submit a proper deponent as required by Fed.R.Civ.P. 30(b)(6), and imposing sanctions under Fed.R.Civ.P. 37.

A. Initial Disclosures

The Defendants contend that the Plaintiff's Rule 26(a)(1) initial disclosures, made on May 14, 2002, were defective and inadequate. A "major purpose" of Rule 26(a) "is to accelerate the exchange of basic information about the case and to eliminate the paper work involved in requesting such information." Fed.R.Civ.P. 26(a) advisory committee's note (1993 amendments). To that end, the rule requires parties, inter alia, "to exchange information regarding potential witnesses, documentary evidence, damages, and insurance" without awaiting formal discovery requests. Id. "A party must make its initial disclosures based on the information then reasonably available to it[.]" Fed.R.Civ.P. 26(a)(1).

Specifically, Rule 26(a)(1)(A) requires disclosure of "the name, and if known, the address and telephone number of each individual likely to have discoverable information that the disclosing party may use to support its claims or defenses, unless solely for impeachment, identifying the subjects of the information." Crouse identified three individuals in its Rule 26(a)(1)(A) disclosure: Larry Crouse, Larry Pendleton, and Bill Cox. Crouse gave the required contact information for Mr. Cox, but indicated the information for Mr. Crouse and Mr. Pendleton was "unknown." The Defendants argue that Crouse failed to comply with Rule 26(a)(1)(A) because (1) Crouse was required to undertake a reasonable investigation and should have had the addresses and phone numbers of its witnesses when it provided its initial disclosures; and (2) Crouse failed to disclose the identity of all potentially relevant witnesses, including the real estate broker who performed a rough market analysis used to determine Crouse's alleged damages.

Whether or not Crouse should have obtained the contact information for Mr. Crouse and Mr. Pendleton through a reasonable investigation is a moot question. Both men were deposed in June 2002 and gave their addresses and telephone numbers at their depositions. (Crouse Dep. at 6; Pendleton Dep. at 6.) Rule 26(e) imposes no duty to supplement incomplete disclosures if the additional information has been made known during the discovery process. Fed.R.Civ.P. 26(e)(1). Thus, the failure to disclose their contact information, even assuming that Crouse should have known that information, was harmless.

The Defendants believe that disclosure is required with respect to persons who might reasonably be expected to be called or deposed by any party. They have overlooked the 2000 amendments to Rule 26(a) which eliminated that requirement. The disclosure obligation under the rule is now limited to the witnesses and materials that the disclosing party may use. Fed.R.Civ.P. 26(a)(1)(A), (B); Fed.R.Civ.P. 26(a)(1) advisory committee's note (2000 amendments). The mere fact that Crouse identified only three individuals, without more, is insufficient to show noncompliance with the disclosure obligations of Rule 26(a)(1)(A). It is quite possible that these three individuals were the only individuals that Crouse intended to use to support its claims or defenses and for whom disclosure was required consistent with Rule 26(b).

As for the identity of the real estate broker who performed the rough market analysis, Magistrate Judge Baker correctly concluded that his or her identity is protected because the broker is a non-testifying expert under Rule 26(b)(4)(B) and, the court adopts Judge Baker's reasoning and conclusions regarding the real estate broker and rough market analysis as the undersigned's own. (See Magistrate Judge's Entry on Defs.' Mot. Compel at 3-7.) The undersigned adds that although the Defendants have argued that Crouse waived any privilege or doctrine which may have protected the identify of the real estate broker, they have cited no authority to support their position on waiver. This argument, then, does not persuade the court that the protection afforded under Rule 26(b)(4)(B) no longer applies to the real estate broker and his or her rough market analysis.

The Defendants stress that their motion addressed Crouse's "global failure to comply with Rule 26(a)(1)" (Objection at 3), rather than just the failure to identify the real estate broker and provide the rough market analysis. The focus of the motion to compel does seems to be on the real estate broker and market analysis, however. To the extent the motion goes beyond the broker and market analysis, the Defendants have not shown that Crouse failed to disclose the identities of individuals "likely to have discoverable information that the disclosing party [Crouse] may use to support its claims or defenses, unless solely for impeachment," Fed.R.Civ.P. 26(a)(1)(A), or failed to disclose documents in its "possession, custody or control" that it "may use to support its claims or defenses, unless solely for impeachment." Fed.R.Civ.P. 26(a)(1)(B). Granted, this may be a high hurdle to clear, but the Defendants have not cleared it: They have not shown that Crouse had information as to the identities of individuals or had any other documents for which disclosure was required under Rule 26(a)(1) and Rule 26(b) but for which no disclosure was made.

However, the court reminds Crouse that Rule 26(e)(1) imposes a duty on parties to supplement their initial disclosures. A party has a duty to supplement or correct a Rule 26(a) disclosure to include information thereafter acquired if "the party learns that in some material respect the information disclosed is incomplete or incorrect and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing." Fed.R.Civ.P. 26(e). Crouse is also reminded that Rule 37(c)(1) gives teeth to Rule 26(a) and Rule 26(e) by providing that a party who "without substantial justification fails to disclose information required by Rule 26(a) or 26(e)(1) . . . is not, unless such failure is harmless, permitted to use as evidence at a trial, at a hearing, or on a motion any witness or information not so disclosed."

Rule 26(a)(1)(B) requires disclosure of "a copy of, or a description by category and location of, all documents, data compilations, and tangible things that are in the possession, custody, or control of the party and that the disclosing party may use to support its claims or defenses, unless solely for impeachment." This rule does not require production of documents, but allows for production in lieu of a description. Fed.R.Civ.P. 26(a)(1) advisory committee's note (1993 amendments). If only a description is provided, then the opposing party is expected to obtain the documents under Rule 34 or through informal requests. Id.

The Defendants contend that Crouse failed to comply with Rule 26(a)(1)(B) and the parties' agreement that they would produce the documents required under the rule instead of simply describing them since Crouse identified eight categories of documents but produced only six. The Defendants argue that Crouse failed to identify or describe the location of the documents it did not produce. The Defendants summarize their position by stating that "[i]t is inconceivable that Crouse could have only 8 documents to support its claims and/or defenses, and apparently has possession of only 6." (Mot. Compel at 4, ¶ 5.)

Magistrate Judge Baker correctly concluded that Rule 26(a)(1)(B) does not require the production of documents. Rather, the rule "permits the disclosing party to choose either form of disclosure." Sithon Maritime Co. v. Holiday Mansion, No. Civ.A.96-2262-EEO, 1998 WL 638372, at *2 (D.Kan. Sept. 14, 1998). Though counsel may have agreed otherwise, Crouse later opted to produce some documents and identify others.

The Defendants complain that Crouse did not provide any insurance policies or certificates of insurance for the insurance coverage required by the lease, did not produce any receipts or documents regarding repairs to correct the alleged defaults identified in default notices sent to Crouse, and did not produce the rough market analysis prepared by the real estate broker. It is quite possible that Crouse did not have "possession, custody, or control" of such documents and/or that they never existed, so Magistrate Judge Baker correctly concluded that production of such documents would not be compelled. It is also possible that Crouse does not intend to use any documents to support its claims or defenses other than the eight categories of documents identified in its initial disclosures. Defense counsel's belief that Crouse failed to identify all the documents that it should have is not enough to show noncompliance with Rule 26(a)(1)(B). Once again, however, Crouse is reminded of the duty to supplement initial disclosures imposed by Rule 26(e) as well as the potential consequences under Rule 37(c) for failing to make complete or correct disclosures. The Defendants could have sought (and still may seek) through a Rule 34 request production of the documents identified in but not produced with the disclosures. See Fed.R.Civ.P. 26(a)(1) advisory committee's note (1993 amendments).

This brings the court to Crouse's failure to provide the location of the documents identified but not produced — certified copies of insurance policies insuring the subject property on December 8, 2000, certificates of insurance relating to the subject property, and the August 9, 2000, report of ATC Associates, Inc. concerning alleged contamination of the subject property. Crouse should have disclosed the location of these documents in its Rule 26(a)(1)(B) disclosure, but did not. It seems, however, that Crouse subsequently disclosed the location, though imprecisely, of the certified copies of insurance policies and certificates of insurance. (See Counsel's Verified Statement Support Mot. Compel, Ex. B, Letter from Irvin to Elliott of 5/24/02 at 3 (stating that the insurance policies and certificates of insurance "are located either at my client's business or its insurance agent's business. Upon receipt of those documents from my client, I will promptly forward them to you.")). The court has no reason to doubt Attorney Irvin's representations that he will provide to the Defendants the insurance policies and certificates of insurance upon receipt from Crouse. Though the letter did not indicate that the August 9, 2000 report of ATC Associates also would be provided, the court assumes that Attorney Irvin also intended to provide this report to Defendants upon receipt from Crouse. Thus, the court assumes that the insurance policies, certificates of insurance, and the ATC report were provided to the Defendants or will be provided to them within ten days of today's date. If they have not been provided by the end of the ten day period, then on motion from the Defendants, the court may modify the Magistrate Judge's Entry on Defendants' Motion to Compel with respect to these documents. At this time, however, the court perceives no reason to modify the denial of the motion to compel with respect to the Rule 26(a)(1)(B) disclosures.

The Defendants argue that Crouse failed to comply with its obligations under Fed.R.Civ.P. 26(a)(1)(C) which require it to provide "a computation of any category of damages claimed by the disclosing party, making available for inspection and copying as under Rule 34 the documents or other evidentiary material, not privileged or protected from disclosure, on which such computation is based[.]" The duty of disclosure does not require production of documents which are privileged or otherwise protected. Fed.R.Civ.P. 26(a)(1) advisory committee's note (1993 amendments). The Defendants argue that they are entitled to obtain the real estate broker's report or rough market analysis under Rule 26(a)(1)(C). As stated, Magistrate Judge Baker correctly concluded that disclosure of the real estate broker's rough market analysis was not required as it is entitled to the protection afforded the facts known and opinions of a non-testifying expert under Rule 26(b)(4)(B), and the Defendants have not shown that Crouse waived that protection.

B. Certified Questions

During the deposition of Mr. Pendleton, the Defendants certified two questions for the court's review. The first was about the values that Mr. Pendleton had seen attributed to the subject property by the real estate broker, that is, the rough market analysis. (Pendleton Dep. at 121; see also id. at 119-20; Certification of Court Reporter at 2-3.) As stated, Magistrate Judge Baker correctly concluded that the rough market analysis is entitled to protection, and the Defendants have not demonstrated waiver of that protection. This certified question and the questions on the same topic immediately preceding the certified question attempt to elicit information about the real estate broker and/or the rough market analysis. Thus, the motion to certify this question was properly denied.

The second certified question was about how many reports valuing the subject property Mr. Pendleton had seen, whether there were four reports or two, and whether they were prepared by one person or more than one person. (Pendleton Dep. at 124-25; Certification of Court Reporter at 3.) Attorney Irvin objected to the second certified question based on the attorney-client privilege. (Pendleton Dep. at 124-25.) The Defendants state in their motion to compel that the certified questions concerned the broker's analysis, computation of Crouse's damages, and the broker's market analysis. (Mot. Compel at 9.) Based on the record and the assertion of the attorney-client privilege, the Magistrate Judge found it difficult to determine whether the questions were seeking to elicit information about the real estate broker and the rough market analysis which he determined were entitled to protection. (Entry Mot. Compel at 8-9.) The court agrees with this assessment.

Though the attorney-client privilege would not protect the letters exchanged between counsel or the information contained in the letters, the certified questions did not ask about the letters themselves or the content of the letters. Rather, they asked Mr. Pendleton about his knowledge of reports valuing the subject property. The Defendants imply that the Magistrate Judge erred in denying the motion to compel responses to these questions because counsel objected on the grounds of attorney-client privilege. The court finds no error. To the extent the certified question sought to inquire about the real estate broker and his or her rough market analysis, the non-testifying expert protection was apparent. Thus, Magistrate Judge Baker did not err in granting in part and denying in part the motion to compel responses to the second question certified in Mr. Pendleton's deposition.

C. Depositions

The Defendants contend that Crouse violated Fed.R.Civ.P. 30(b)(6) by failing to designate knowledgeable witnesses and failing to prepare them to testify on its behalf. They request the court to deem that Crouse failed to attend its own deposition and award costs and or fees incurred for the Rule 30(b)(6) depositions.

In response to the Defendants' Notice of Taking 30(b)(6) Deposition ("Deposition Notice"), Crouse produced for deposition on June 19, 2002, its designees Larry Crouse and Larry Pendleton. The Defendants claim that it was "very obvious" that neither had been prepared for their deposition and that they admitted to having done very little to prepare and having limited knowledge as to the topics identified in the deposition notice. Following the depositions of Messrs. Crouse and Pendleton, topics Nos. 2 (partially), 3-4, 6-11, and 14-26 remained unanswered.

Magistrate Judge Baker concluded that there was no Rule 30(b)(6) violation. This conclusion is neither clearly erroneous nor contrary to law. Though Messrs. Crouse and Pendleton could not answer all subjects identified in the Deposition Notice, there is evidence that their designation as witnesses who had knowledge of those subjects was made in good faith. In designating Messrs. Crouse and Pendleton, Crouse's counsel relied on their identification by Bill Cox, Crouse's only remaining employee, as witnesses who could testify about the subjects in the Deposition Notice. (Pl.'s Verified Objection Resp. ¶¶ 10-11.) Also, it is noted that Mr. Crouse testified that he had personal knowledge of subjects 1 and 2 in the Deposition Notice (Crouse Dep. at 23), and Mr. Pendleton testified that he was "probably the most knowledgeable person as a whole about the situation" between Crouse and National Warehouse (Pendleton Dep. at 14) and he was the "point man" between Crouse and National Warehouse. (Id. at 24.)

Though the preparation of these witnesses may not have been ideal, there is evidence of some preparation. When asked whether they did anything to prepare for deposition, Mr. Crouse testified that he looked through some old documents, the lease agreement, and the purchase and sale agreement, and Mr. Pendleton testified that he reviewed the Crouse files on the Indianapolis property. (Crouse Dep. at 12; Pendleton Dep. at 9-10.) Both witnesses also testified to having met with Attorney Irvin and reviewed the Deposition Notice with him before their depositions, albeit the morning of their depositions and for a short period of time. (Crouse Dep. at 13; Pendleton Dep. at 12-13.)

Magistrate Judge Baker noted that the Defendants have not received adequate responses to the subjects numbered 2-4, 6-11, and 14-26 in the Deposition Notice and should be given the opportunity to explore them through the witnesses identified in the depositions of Mr. Crouse and Mr. Pendleton or from other reliable sources uncovered in discovery. The court agrees. Though it is unfortunate that Messrs. Crouse and Pendleton were unable to provide answers to all the subjects identified in the Deposition Notice, the court does not find convincing evidence of intentional bandying by Crouse. Therefore, the court finds no error in Magistrate Judge Baker's decision to grant in part and deny in part the motion to compel responses to Rule 30(b)(6) depositions, granting the motion to the extent that Crouse is ordered to make Mr. Cox available for the second day of his deposition and make available any other witness identified as having pertinent knowledge to respond to the Deposition Notice.

D. Sanctions

Both parties moved for sanctions under Rule 37. The court finds no error in the Magistrate Judge's denial of the Defendants' motion for sanctions given the conclusion that there was no Rule 30(b)(6) violation. Furthermore, because the motion to compel is granted in part and denied in part, under Rule 37(a)(4)(C), the decision whether to apportion the reasonable expenses related to the motion among the parties is discretionary. The decision not to apportion expenses in this instance was not an abuse of the Magistrate Judge's discretion or clearly erroneous or contrary to law. No error can be found in the denial of Crouse's motion either, for two reasons: Crouse did not comply with Local Rule 7.1(a), and the Defendants' motion to compel has been partially granted.

II. Conclusion

For the foregoing reasons, the Defendants' Objection to Entry on Defendants' Motion to Compel Disclosure is OVERRULED, Magistrate Judge Baker's Entry on Defendants' Motion to Compel Discovery is AFFIRMED, and discovery is RE-OPENED for sixty (60) days for the limited purpose of allowing the Defendants to obtain copies of the documents identified but not produced with Crouse's Rule 26(a)(1) disclosures and to conduct the discovery indicated by Magistrate Judge Baker in granting the motion to compel responses to Rule 30(b)(6) depositions.

As an aside, the court is puzzled that the Defendants were not satisfied with Magistrate Judge Baker's well-reasoned decision. It is somewhat remarkable that the Defendants would consume additional court time on these matters and that they would pay their lawyers to continue to beat a dead horse. If Judge Baker had not already decided not to sanction the Defendants for frivolously pursuing the motion to compel, this court may have been inclined to do so. This aspect of this case has consumed far more judicial resources than necessary. A lawyerly approach with a dose of civility and common sense would have gone a long way to solving the Defendants' concerns without imposing on the court.

ALL OF WHICH IS ORDERED.