Opinion
Civil Action No. 2001-CV-05641.
September 27, 2007
KENNETH A. JACOBSEN, ESQUIRE, FRANCES J. FARINA, ESQUIRE, JOSEPH A. O'KEEFE, ESQUIRE, On behalf of Plaintiffs.
MICHAEL L. MARTINEZ, ESQUIRE, DANIEL T. CAMPBELL, ESQUIRE, MALCOLM J. GROSS, ESQUIRE, On behalf of Defendants Keystone Health Plan Central, Inc, Capital Blue Cross, Joseph Pfister and James M. Mead.
ORDER
AND NOW, this 27th day of September, 2007, upon consideration of plaintiffs' motions for sanctions, respondents' memoranda in opposition thereto, plaintiffs' reply, the testimony presented and exhibits admitted at the hearing, the parties' proposed findings of fact and conclusions of law, and briefs in support thereof,
IT IS ORDERED that plaintiffs motions under Federal Rules of Civil Procedure 26(g)(3) and 37 are GRANTED.
IT IS FURTHER ORDERED that respondents are sanctioned for violations of Rules 26(g) and 37, and shall pay all fees and costs incurred by plaintiffs in connection with the prosecution of these motions, including but not limited to, preparation and filing of the motions, preparation and attendance at the hearing, preparation of post-hearing submissions to the SDM, costs of the stenographer, reproduction of the record, and the fees of the SDM.
IT IS FURTHER ORDERED that the allocation of fees and costs shall be as follows: Keystone — 20%, Capital — 20%, Crowell — 10%, Martinez and Campbell — 50%.
IT IS FURTHER ORDERED that Keystone and Capital shall file amended responses to plaintiffs' discovery request dated September 29, 2006 in compliance with the Federal Rules of Civil Procedure on or before October 8, 2007.
IT IS FURTHER ORDERED that if any party appeals this Order, that party shall file with the Court a complete copy of the record in this matter, including all pleadings and memoranda, the hearing transcript and all exhibits.
OPINION
Plaintiffs have filed two (2) motions for sanctions against defendants Capital Blue Cross and Keystone Health Plan Central, Inc., and their counsel regarding alleging discovery violations under Fed.R.Civ.P. 26(g)(3) and 37. One motion, made orally on November 15, 2006 and in writing on November 16, 2006, alleged failure of defendants Capital and Keystone to comply with discovery by filing boilerplate general objections to discovery requests and withholding documents on grounds of relevance. The second, dated November 27, 2006, alleged failure to produce document retention material. For the reasons that follow, Keystone Health Plan Central, Inc. (hereinafter "Keystone"), Capital Blue Cross (hereinafter "Capital"), Crowell Moring (hereinafter "Crowell"), Michael Martinez, Esquire (hereinafter "Martinez") and Daniel Campbell, Esquire (hereinafter "Campbell") (collectively "Respondents") are in violation of various discovery orders, directives and requests. Therefore sanctions are assessed against them as set forth in the accompanying Order.
Plaintiffs did not pursue their sanctions motions against individual defendants Pfister or Mead.
BACKGROUND
Throughout this case, discovery has been a contentious process. Four years after the case was filed, the Honorable James Knoll Gardner appointed a Special Discovery Master (hereinafter "SDM") in an attempt to bring order to the chaos of motions, requests, hostility, animosity and other dynamics that had resulted in the ineffectiveness of the discovery process. In Judge Gardner's Appointment Order dated August 25, 2005, he granted the SDM many powers and responsibilities, including, but not limited to:
(7) impose by Order upon a party or movant any noncontempt sanction provided by Fed.R.Civ.P. 37 or 45;
(8) recommend a contempt sanction against a party and sanctions against a non-party[.]
Order, August 25, 2005, at 6-7 (hereinafter "Appointment Order"). Accordingly, this is not a recommendation as usually filed under the Appointment Order, but rather an order and opinion.
FINDINGS OF FACT
1. In 2004 plaintiffs propounded discovery requests on defendants.2. Defendants responded with the production of documents, and also boilerplate objections (hereinafter "general objections") to many of plaintiffs' requests.
3. On April 18, 2005 plaintiffs filed a motion before the Honorable Arnold C. Rapoport, United States Magistrate Judge requesting an Order striking the general objections.
As the Magistrate Judge assigned to Judge Gardner, Judge Rapoport had been overseeing the discovery process prior to my appointment.
4. On July 26, 2005 Judge Rapoport granted plaintiffs' motion and struck defendants' general objections.
See Docket No. 433.
5. Defendants sought reconsideration of Judge Rapoport's Order by Judge Gardner, who granted in part and dismissed in part defendants' motion and referred the issue of general objections and other discovery matters to the SDM by Order of November 2, 2005.
6. Keystone, through its prior counsel, withdrew its general objections in a document entitled "KHP Central's Memorandum Regarding Plaintiffs' Discovery Requests" dated November 3, 2005.
7. Capital, through its former counsel, prepared "Capital Blue Cross and James M. Mead's Amended Responses to Plaintiffs' Written Discovery Requests Directed to Them" dated November 1, 2005, wherein they stated that the revised responses did not include the general objections that had been stricken by Judge Rapoport.
8. Plaintiffs withdrew 220 document requests, and prepared a "High Priority" list of many of the remaining requests.
9. In an e-mail dated November 22, 2005, counsel were told that the general objections had been dismissed, and discovery would proceed with specific objections to specific requests.
See email to counsel dated November 22, 2005.
10. At the October 23, 2006 meeting the SDM reminded counsel that the general objections had been dismissed. (See transcript pages 56-57, 88, 98-99, 100-01).
It is important to note that despite all of the times I told counsel by email and in person that the general objections had been dismissed, at no time did counsel for any party request that I file a formal recommendation, nor did any counsel seek reconsideration of that position by Judge Gardner.
11. There were no discovery meetings for several months due to the class certification hearing, and other matters. Meetings resumed in the fall of 2006.
12. All parties were instructed to submit a list of outstanding discovery issues.
13. Plaintiffs prepared a chart on September 15, 2006 entitled "Plaintiffs' Outstanding Discovery requests pursuant to September 11, 2006 E-mail Directive of Special Discovery Master Blume".
14. At the September 15, 2007 meeting, defendants argued that plaintiffs' chart was still too general and overbroad.
15. On September 21, 2006 plaintiffs were directed to add subcategories of subject areas to both facilitate defendants' search and provide a barometer by which compliance could be measured.
16. At the September 21, 2006 meeting Campbell stated that he "was not there to be an obstructionist or to hide things or to make things any more difficult for any party in the case", that neither Capital or Keystone would object to any request on plaintiffs' list on the grounds that it had not been requested before, and that documents responsive to plaintiffs' discovery requests would be searched for and produced." (Transcript, September 21, 2006, at 27, 68-69, 83, 94).
17. Counsel for Capital and Keystone never stated at the September 21, 2006 meeting that all discovery had been produced.
18. Plaintiffs served "Plaintiffs' Further Elaborated Outstanding Discovery Requests Pursuant to September 11, 2006 E-Mail Directive of Special Master Blume" on September 29, 2006.
19. The defendants requested a continuance of the next meeting in order to have time to conduct a thorough review of plaintiffs' list, which was granted, and the next meeting was scheduled for October 23, 2006.
20. Little progress on this issue was made at that meeting due to an extensive discussion of the effect of Judge Gardner's order regarding privilege logs.
21. Defendants were directed to respond to plaintiffs' further elaborated list by November 8, 2006.
22. In an email dated November 8, 2006 counsel were warned, "Let me assure you that general objections or an unwillingness to discuss issues will not be tolerated."
23. All counsel filed timely responses.
24. Defendant Highmark's response had some general objections, but each response was also accompanied by a specific objection or willingness to produce the requested material.
25. Despite the admonition to the contrary, defendants Capital and Keystone's responses consisted of the following as to most of the requests:
Capital and Keystone Object to this request because it is vague, overbroad, unduly burdensome, seeks information and documents that are irrelevant, immaterial, and not reasonably calculated to lead to the discovery of admissible evidence, and seeks documents outside the class period that Plaintiffs contend ends October 2001. In addition Capital and Keystone object to this request to the extent that it calls for the production of documents or information protected by the attorney-client privilege or work product doctrine.
26. Respondents Capital and Keystone did not offer to produce any documents in response to plaintiffs' request.
27. For those responses for which respondents claimed privilege, they did not produce a privilege log.
28. As Highmark had followed the instructions and provided responses on which a constructive discussion could take place, most of the November 15, 2006 meeting was spent discussing plaintiffs' first ten requests and Highmark's responses thereto.
29. Because Capital and Keystone made no effort to comply with the directive and resolve the discovery logjam, their responses were not addressed until the end of the day.
30. The dates of the class period are artificial, and do not dictate or limit discovery to that period, as evidenced by the hundreds of documents which had already been produced that were outside the class period. (Transcript, at 84-85).
31. When asked about document production pursuant to plaintiffs' requests, counsel for Capital and Keystone responded that they had "produced everything" they were obligated to produce, and that they were making that "representation as counsel for the defendants Keystone and Capital". They maintained that their production of 340,000 documents satisfied their discovery obligation.
See Transcript, November 15, 2006, at 202, 206, 212, 218.
32. At that point plaintiffs were invited to make a motion, if they so chose. On the record, lead counsel for plaintiffs moved for sanctions against Capital and Keystone for discovery abuses, which was followed by a written motion the next day.
33. A hearing was scheduled for November 27, 2006; however, pursuant to defendants' request for a continuance and briefing schedule, and over plaintiffs' vigorous objections, the hearing was continued to December 19 and 20, 2006.
34. When the hearing began, plaintiffs called Martinez to testify. Martinez refused, and wanted a further continuance to fully brief the matter.
35. The issue was presented to Judge Gardner, who ordered Martinez to testify.
36. The hearing was held as scheduled.
37. The deadline for counsel to file proposed findings of fact and conclusions of law was extended to April due to Third Circuit and District Court obligations of counsel.
38. Respondents' contention that plaintiffs' requests were new are unfounded, as demonstrated by plaintiffs' September 29, 2006 chart. Although worded differently, plaintiffs' chart contains references to all items to the original requests.
39. The Order setting forth the process for discovery was the Appointment Order issued by Judge Gardner on August 25, 2005.
40. The characterization of the plaintiffs' sanctions motion as an "informal motion" in the December 2006 Report of the SDM meant that it was not filed with the Clerk of Court per the procedures established by the Appointment Order and agreement of counsel.
41. A written directive need only be issued for rulings that re challenged by a party. If a directive is issued and no one objects, there is no requirement that the directive be reduced to writing.
42. Respondents produced a document retention policy from 1999 on November 22, 2006, the week after they represented that they had produced all discovery that was required.
43. Respondents Keystone and Capital have had multiple prior counsel in this case. (See Docket).
CONCLUSIONS OF LAW
1. The Federal Rules of Civil Procedure require that respondents be given notice of the proceeding and an opportunity to be heard on the issue of sanctions. There is no requirement that the movant provide the respondents with witness or exhibit lists.
It should be noted that when the same issue was later raised before Judge Gardner at another sanctions hearing before him in this case, he made the same ruling.
See Transcript, December 19, 2006, at 7-38.
2. Martinez was not denied due process because Judge Gardner ordered him to testify without giving him the opportunity to fully brief and argue the matter.
Due to the fact that Judge Gardner came to the same conclusion several months later, that argument is without merit.
3. General boilerplate objections of the type filed by respondents are improper responses to discovery requests.
4. If a party alleges in a discovery response that the request is unduly burdensome, the mere allegation is not enough to constitute a valid objection. The respondent must demonstrate with specificity and factual detail the exact nature and extent of the burden.
5. Rule 37(a)(3) of the Federal Rules of Civil Procedure explicitly states, "[A]n evasive or incomplete . . . answer or response [to a discovery request] is to be treated as a failure to . . . answer or respond. Citing that Rule, Judge Powers stated in Teltron, supra, that, since the broad, conclusory discovery responses in that case were "vague and evasive," the objections should be overruled and all the requested discovery produced to the opposing party. Teltron, 1990 WL 198110 (E.D. Pa., Dec. 3, 1990) (Powers, J.).
6. Respondents' ongoing withholding of documents on the grounds of alleged lack of relevance is contrary to two prior Court Orders.
7. Respondents' claim that they need not produce documents that do not fall within the class period is meritless.
8. Rule 37(a)(4) authorizes an award of sanctions to a party in successfully compelling the production of discovery to which that party is entitled.
9. Respondents have violated numerous provisions of Rules 37 and 26(g)(2)(A)-(C) and (3) by repeatedly interposing general, boilerplate objections to plaintiffs' document requests and ignoring numerous Orders of the Court, including those of Judge Gardner and Judge Rapoport and the directives of the Master, and by repeating those objections in their November 8, 2006 Response.
10. Respondents' contention that there is no Order in effect that they have violated, and therefore sanctions against them cannot be imposed is meritless.
11. Respondents' argument that plaintiffs have the burden of proving that legitimate discovery was withheld is meritless.
12. Respondents were not denied due process because the motion was "informal", i.e. not filed with the Clerk of Court, vague, and did not specify the exact discovery violations alleged by plaintiffs.
DISCUSSION
General boilerplate objections are improper responses to discovery requests. See, e.g., Coregis Ins. Co. v. Baratta Fenerty, Ltd., 187 F.R.D. 528, 530 (E.D. Pa. 1999) (Joyner, J.) (general "boilerplate" objections to discovery improper); Momah v. Albert Einstein Medical Center, 164 F.R.D. 412, 417 (E.D. Pa. 1996) (Joyner, J) ("mere recitation of familiar litany that interrogatory or document production request is overly broad, burdensome, oppressive and irrelevant" is improper to meet burden on producing party to "state grounds for objection with specificity"); Massachusetts School of Law at Andover v. American Bar Ass'n, 1996 U.S. Dist. LEXIS 1619, 1996 WL 65448 at *5-6 (E.D. Pa., Feb. 15, 1996) (Ditter, J.) (boilerplate, conclusory objections, even to claims of privilege, are improper and stricken; discovery compelled); Haring v. Eckerd Corp., 2002 U.S. Dist. LEXIS 11654 at *3-*4 (E.D. Pa., May 16, 2002) (Buckwalter, J.) (boilerplate objections to relevance, privilege and burden overruled as improper; discovery ordered); Vargas v. Palm Management Corp., 2004 U.S. Dist. 5256 at *5 (E.D. Pa., March 26, 2004) (Kelly, J.) ("general, unspecified objections to discovery requests" are "insufficient and improper"); Teltron, Inc. v. Alexander, 1990 WL 1981100 (E.D. Pa., Dec. 3, 1990) (Powers, J.) (overruling conclusory objections that discovery was "overbroad" and sought irrelevant and privileged material, and ordering discovery produced); Boyle v. Gary Barbara Dodgeland, 2000 U.S. Dist. LEXIS 11751 at *1 (E.D. Pa., July 7, 2000) (Hutton, J) (criticizing defendant's "use of semantics" in objections to evade discovery); Klemka v. BIC Corp., 1996 U.S. Dist. LEXIS 2700 at *10-14 (E.D. Pa., March 8, 1996) (objections to discovery, including privilege, asserted in "conclusory fashion" are improper and `will be stricken'"); A. Garber Partners v. Garber, 234 F.R.D. 186 (C.D. Cal. 2006) ("general or boilerplate objections to discovery requests such as `overly burdensome and harassing' are improper").
As the Court observed in Wachtel v. Guardian Life Ins. Co., 2006 U.S. Dist. LEXIS 27117, *38 (D.N.J., May 5, 2006), affirming sanctions ordered by the Magistrate Judge in language which is equally applicable here, "Defendants have made a practice of evasive discovery responses in this litigation and have relied on boilerplate responses, claiming they are sufficiently specific to provide notice to Plaintiffs and the Court when they in fact obfuscate the truth." Id. n. 8. To the same effect is PLX, Inc. v. Prosystems, Inc., 220 F.R.D. 291, 297-300 (N.D.W.Va. 2004) (expressly repudiating "general objections" based on relevance, burden and other "boilerplate" responses and the incorporation of those "general" objections into subsequent specific responses; awarding sanctions). See also Burlington Northern Santa Fe Railway Co. v. United States District Court for the District of Montana, 408 F.3d 1142, 1149 (9th Cir. 2005); Ruran v. Beth El Temple of West Hartford, Inc., 226 F.R.D. 165, 167-170 (D. Conn. 2005); Sonnino v. University of Kansas Hospital Authority, 221 F.R.D. 661, 668-69 (D. Kan. 2004), citing Peat, Marwick, Mitchell Co. v. West, 748 F.2d 540, 542 (10th Cir. 1984); Harding v. Dana Transport, Inc., 914 F. Supp. 1084, 1102 (D.N.J. 1996).
The decision in PLX, Inc. v. Prosystems, Inc., 220 F.R.D. at 296-300, is compelling authority for the sanctions imposed here. PLX involved defendants' assertion of numerous general objections, which they incorporated by reference in their subsequent responses to plaintiffs' specific document requests. Citing the plethora of cases and courts which have rejected this practice, id. at 297, the PLX court wrote:
"In the instant case, counsel for [defendants'] responses to [plaintiffs'] discovery requests were in express violation of the Fed.R.Civ.P. His actions have caused not only unnecessary delay and increased the cost of litigation for the parties, but also has (sic) increased the burden on this Court. Counsel for [defendants] was given three separate opportunities to present to this court case law supporting his assertion that a party is permitted to answer discovery requests with general objections. On all three occasions, counsel has only relied on only one case.
Counsel for [defendant] intentionally and willfully violated the Fed.R.Civ.P. If this conduct is permitted without sanction, it will destroy all discovery in civil cases. The 1993 amendments to the Fed.R.Civ.P. were adopted to prevent this gamesmanship. Every other counsel in every other case who has filed general objections has acknowledged at the Opportunity to be Heard that general objections are inappropriate. And in all such cases, no sanctions were ordered. The [defendants'] intelligent, experienced and skillful counsel insists he is permitted to do what he did notwithstanding the lack of case law to support his position."220 F.R.D. at 300 (citations omitted). The PLX court imposed monetary sanctions under Rule 26(g)(3) against both defendants and their counsel for their unapologetic violations of the discovery rules through the use of improper general objections.
Both the Order of Appointment and Rule 53 grant the authority to award sanctions under Rule 26(g)(3). As stated in the Advisory Committee notes to the 1983 Amendments to Rule 26(g):
"Rule 26(g) makes explicit the authority judges now have to impose appropriate sanctions and requires them to use it. The authority derives from Rule 37, 28 U.S.C. § 1927 and the court's inherent power."Id. (citations omitted). See also id.: "Rule 26(g) imposes an affirmative duty to engage in pretrial discovery in a responsible manner that is consistent with the spirit and purposes of Rules 26 through 37." The court in PLX explicitly noted these references to Rule 37 and the interplay and interconnection between the two Rules in awarding sanctions in that case under Rule 26(g)(3). 220 F.R.D. at 296, 299.
If a party alleges in a discovery response that the request is unduly burdensome, the mere allegation is not enough to constitute a valid objection. The respondent must demonstrate with specificity and factual detail the exact nature and extent of the burden. See, e.g., Fort Washington Resources, Inc. v. Tannen, 153 F.R.D. 78, 79 (E.D. Pa. 1994) (Joyner, J.) (party resisting discovery on grounds of alleged burden must support objection with "particularized facts and details regarding the amount of time and expense and why such amounts are unduly burdensome;" "broad allegations of harm" and mere "conclusory statements" are wholly insufficient), quoting Cippillone v. Liggett Group, Inc., 785 F.2d 1108, 1121 (3d Cir. 1986), cert. denied, 484 U.S. 976 (1987); United States v. Garrett, 571 F.2d 1323, 1326 n. 3 (5th Cir. 1978); Panola Land Buyers Ass'n v. Shuman, 762 F.2d 1550, 1559 (11th Cir. 1985). Accord General Electric Capital Corp. v. Lear, 215 F.R.D. 637 (D. Kan. 2003) (party resisting discovery as unduly burdensome bears burden of showing facts demonstrating that the time and expense involved in responding to requested discovery is unduly burdensome; this burden includes obligation to provide detailed information about actual time and money involved and procedure required to comply with discovery request); Resnick v. American Dental Ass'n, 90 F.R.D. 530, 542 (N.D. Ill. 1981) (in class action, defendants' "wholly conclusory" objection to discovery on grounds of undue burden, without "greater concreteness" in proof, inadequate to thwart discovery); Wachtel v. Guardian Life Ins. Co., 2006 U.S. Dist. LEXIS 27117 at *35 (D.N.J., May 5, 2006) ("boilerplate objections simply stating "burden'" inadequate to justify failure to search for e-mails requested by plaintiffs years earlier).
Rule 37(a)(3) of the Federal Rules of Civil Procedure explicitly states, "[A]n evasive or incomplete . . . answer or response [to a discovery request] is to be treated as a failure to . . . answer or respond. Citing that Rule, Judge Powers stated in Teltron, supra, that, since the broad, conclusory discovery responses in that case were "vague and evasive," the objections should be overruled and all the requested discovery produced to the opposing party. Teltron, 1990 WL 198110 (E.D. Pa., Dec. 3, 1990) (Powers, J.). See also Philadelphia Housing Authority v. American Radiator Standard Sanitary Corp., 50 F.R.D. 13, 18 (E.D. Pa. 1970) (Lord, C.J.) ("discovery procedures cannot be frustrated by such a transparent sham" as written discovery responses which are facially improper and deficient; sanction of dismissal of case ordered), aff'd, 438 F.2d 1187 (3d Cir. 1971).
The determination of relevance is not up to counsel. This issue has been addressed in this case by both Judge Gardner and Judge Rapoport. Defendants' ongoing withholding of documents on the grounds of alleged lack of relevance is contrary to two prior Court Orders. Mindful of the potential for abuse when litigants are the arbiters of relevance, Judge Rapoport instructed respondents' counsel at a January 14, 2004 conference in this case "that's [relevance] not for you to decide." Following that conference, and at respondents' specific request, Judge Rapoport filed a formal Order dated the same day in which he directed respondents to produce "all documents in counsel's possession which have not previously been produced." (Docket. No. 58). The Keystone defendants' moved for reconsideration of Judge Rapoport's Order alleging that it created ambiguity in defendants' obligation to produce privileged documents. In an Opinion and Order dated April 26, 2004 (Docket. No. 86), Judge Gardner clarified the scope of Judge Rapoport's Order as it related to privileged documents, but affirmed Judge Rapoport's directive that defendants could not withhold documents on grounds of lack of relevance, stating, "However, defendants are not the judge of what is relevant." Judge Gardner's and Judge Rapoport's Orders are consistent with a long and unbroken line of cases in both this District and elsewhere which hold that "[t]he defendant may not determine on its own what is relevant for discovery purposes." Grossman v. First Pennsylvania Corp., 1992 U.S. Dist. LEXIS 2266 at *7 (E.D. Pa., Feb. 24, 1992) (Hutton, J.), citing Xaphes v. Merrill Lynch, 102 F.R.D. 545 (D. Me. 1984).
See Transcript of January 14, 2004 Conference, page 20.
Opinion, at 20.
Respondents have made no effort to demonstrate the basis for their contention that the documents not produced are not relevant. See, e.g. Ruran v. Beth El Temple of West Hartford, Inc., 226 F.R.D. 165, 167-69 (D. Conn. 2005) (the defendant, as the objecting party, has the burden of demonstrating "specifically how, despite the broad and liberal construction afforded the federal discovery rules, each [request] is not relevant or how each question is overly broad, [unduly] burdensome or oppressive by submitting affidavits or offering evidence revealing the nature of the burden"), quoting Compagnie Francaise D `Assurance Pour Le Commerce Ecterieur v. Phillips Petroleum, 105 F.R.D. 16, 42 (S.D.N.Y. 1984), citing Kimbro v. I.C. Systems, Inc., 2002 WL 1816820, 2002 U.S. Dist. LEXIS 14599 at *2 (D. Conn., July 22, 2002). Accord Burke v. New York City Police Dep't, 115 F.R.D. 220 (S.D.N.Y. 1987) (party resisting discovery on grounds of alleged lack of relevance has burden of proving that documents do not come within broad scope of relevance permitted under the Rules).
The Circuit Court in Farm Construction Services, Inc. v. Fudge, 831 F.2d 18, 21 (1st Cir. 1987) upheld the dismissal of the plaintiff's complaint as a sanction for the plaintiff's persistent failure to produce documents during discovery on grounds of alleged lack of relevance. Characterizing the requested documents as "wholly unrelated" to the case and asserting that the disputed documents "in no way whatsoever relate to any issue remaining in this action," the plaintiff refused to produce them despite being ordered by the District Court to do so. Stating that the only legitimate ground for non-production was plaintiff's legitimate inability to produce documents responsive to the defendants' requests, the Court of Appeals, like the District Court, was unimpressed by plaintiff's relevance argument, "Even more culpable is appellant's unilateral decision, supplanting that of the court, that the documents requested were not relevant to the case . . . We can find no abuse of discretion on the part of the district court in dismissing a case where the appellant has intentionally disregarded court orders on repeated occasions and substituted its own judgment for that of the court." Id. at 21. See also Philadelphia Housing Authority v. American Radiator Standard Sanitary Corp., 50 F.R.D. 13, 17 (E.D. Pa. 1970) (Lord, C.J.) (rejecting "plaintiffs' bare assertions that much of the information sought is irrelevant" and awarding sanction of dismissal of case under Rule 37 for plaintiff's failure to answer interrogatories), aff'd, 438 F.2d 1187 (3d Cir. 1971).
Respondents' claim that they need not produce documents that do not fall within the class period is meritless. Hundreds, if not thousands, of documents have been produced by all defendants, which do not fall within the class period. In fact, the first document retention policy produced by Capital and Keystone was from 2003, which is beyond the class period. There is no "general rule which would limit class action discovery solely to the class action period." Grossman v. First Pennsylvania Corp., 1992 U.S. Dist. LEXIS 2266 * 1 (E.D. Pa., Feb. 24, 1992) (Hutton, J.) (ordering defendants to produce discovery which both pre-dated and post-dated class period alleged in plaintiff's complaint), citing In re Control Data Securities Litigation, 1988 WL 92085, *3 *8 (D. Minn., Feb. 22, 1988); National Organization for Women, Inc. v. Minnesota Mining and Manufacturing, 73 F.R.D. 467, 472 (D. Minn. 1977).
The general rules of discovery apply to pre- and post-class period information. Grossman, supra. And applying this standard, courts have repeatedly held that factual information and documents which came into existence after a cause of action arose or even after the commencement of the litigation may be relevant to the claims or defenses involved in the action and therefore discoverable. See, e.g., Robco Distributors v. General Glass Int. Corp., 101 F.R.D. 547, 548-49 (E.D.N.Y. 1984); United States v. Capitol Services, Inc., 89 F.R.D. 578, 587 (E.D. Wis. 1981); Dart Drug Corp. v. Corning Glass Works, 480 F. Supp. 1091, 1107 (D. Md. 1979); Carlson Co. v. Sperry Hutchinson Co., 374 F. Supp. 1080, 1101-04 (D. Minn. 1974); United States v. IBM Corp., 66 F.R.D. 180, 184-85 (S.D.N.Y. 1974); Cornaglia v. Ricciardi, 63 F.R.D. 416, 421-22 (E.D. Pa. 1974); Goldinger v. Boron Oil Co., 60 F.R.D. 562, 564 (W.D. Pa. 1973); Cleo Wrap Corp. v. Elsner Engineering Works, 59 F.R.D. 386, 388 (M.D. Pa. 1972); Bass v. Gulf Oil Corp., 304 F. Supp. 1041 (S.D. Miss. 1969). As the Western District held in Goldinger, supra.
In Resnick v. American Dental Ass'n, 90 F.R.D. 530, 541 (N.D. Ill. 1981). defendants argued that discovery should be limited to the relevant time period alleged in plaintiff's class action complaint — the period of plaintiff's employment with defendants giving rise to claims of discrimination. Rejecting that argument, the court allowed discovery of information both before and after that period, ruling that past discrimination may be relevant to plaintiff's individual claim, and that post-employment facts may also be relevant to the claims of other members of the class. Accord Norton v. Tallahassee Memorial Hospital, 1978 WL 13923 (N.D. Fla., July 26, 1978); Ylla v. Delta Airlines, 25 Fair Empl. Prac. Cases (CBNA) 746 (N.D. Ga. 1977).
In this case, plaintiffs have alleged RICO activity, which did not suddenly begin on January 1, 1996, the beginning of the class period, and end on October 5, 2001. Plaintiffs are entitled to discovery on how and when those practices began, who knew about them, how much harm was inflicted on the class by them and other information related to such activity without time limits sought to be imposed by defendants after more than five years of contrary practice. While damages may be limited to the class period, discovery of relevant information which bears on plaintiffs' substantive claims or defendants' defenses is not.
Rule 37(a)(4) authorizes an award of sanctions to a party in successfully compelling the production of discovery to which that party is entitled. For purposes of that subdivision, as noted above, "an evasive or incomplete disclosure, answer or response [to a discovery request] is to be treated as a failure to disclose, answer or respond" with all of the attendant consequences under Rule 37(a)(4) which flow from such a designation. Rule 37(b)(2) authorizes the imposition of sanctions for a party's failure to comply with a discovery order, of which Judge Rapoport's January 14, 2004 oral directive and subsequent Order, Judge Rapoport's July 26, 2005 Order, Judge Gardner's April 26, 2004 and November 2, 2005 Orders and SDM directives that were not requested to be converted to written directives and appealed to Judge Gardner, certainly qualify.
Orders exposing the recalcitrant party to sanctions under Rule 37(b)(2) are not just prior orders entered against the party under Rule 37(a) but include any order or directive by the court — oral, written or otherwise — directing a party to provide or cooperate in discovery. Daval Steel Products v. M/V Fakredine, 951 F.2d 1357, 1363 (2d Cir. 1991).
Rule 37(d) authorizes an award of sanctions for a party's failure to timely and properly respond to a discovery request. Consequently, the SDM has the power and authority under the provisions of Rule 37 to enter the sanctions against respondents. "Rule 37 sanctions must be applied diligently both `to penalize those whose conduct may be deemed to warrant such a sanction, [and] to deter those who might be tempted to such conduct in the absence of such a deterrent.'" Roadway Express, Inc. v. Piper, 447 U.S. 752, 763-64 (1980), quoting National Hockey League v. Metropolitan Hockey Club, 427 U.S. 639, 643 (1976). The Third Circuit has expressed similar views, and has repeatedly emphasized that Rule 37 violations warrant appropriate sanctions. Courts can no longer indulge "deliberate tactical intransigence" by litigants. Barnett v. Outboard Marine Construction, 611 F.2d 32, 36 (3d Cir. 1979). Applying Rule 37, the Third Circuit and the District Courts have not hesitated to impose severe sanctions against parties, including dismissal of plaintiffs' complaints and entry of default judgments against defendants, for egregious discovery abuse. See National Hockey League, supra (reversing Third Circuit and affirming District Court dismissal of case for deficient interrogatory answers after 17 months); Poulis v. State Farm Fire Casualty Co., 747 F.2d 865 (3d Cir. 1984) (failure to answer interrogatories and file pretrial statement); Comdyne I, Inc. v. Corbin, 908 F.2d 1142 (3d Cir. 1990) (failure to answer interrogatories, failure to produce documents, other defaults); In Re Victor, 2004 U.S. App. LEXIS 4709 (3d Cir. 2004) (failure to produce tax returns); Hicks v. Feeney, 850 F.2d 152 (3d Cir. 1988) (dismissal for failure to attend deposition). See also Curtis T. Bedwell Sons, Inc. v. Int'l Fidelity Ins. Co., 843 F.2d 683 (3d Cir. 1988).
As noted above, under Rule 37(a)(3), an evasive or incomplete response to a discovery request is deemed a failure to respond. Furthermore, under Rule 37(d), a failure to timely and properly respond to discovery "may not be excused on the ground that the discovery sought is objectionable unless the party failing to act has a pending motion for a protective order as provided by Rule 26(c)." Furthermore, remedies under Rule 37 are mandatory in nature and shall be awarded unless extenuating circumstances make any such award unjust.
A Master has wide discretion in imposing sanctions under Rule 37, including severe sanctions under Rule 37(b)(2). Daval Steel Products v. M/V Fakredine, 951 F.2d 1357, 1365 (2d Cir. 1991). As discussed in the above-cited authorities, among the sanctions specifically authorized by Rule 37(b)(2)(A)-(C) for failure to comply with discovery orders, in addition to the award of attorneys' fees and expenses, are the following:
"(A) An order that the matters regarding which the order was made or any other designated facts shall be taken as established for the purposes of the action in accordance with the claim of the party obtaining the order;
(B) An order refusing to allow the disobedient party to support or oppose designated claims or defenses, or prohibiting that party from introducing designated matters into evidence; [and]
(C) An order striking out pleadings or parts thereof, or staying further proceedings until the order is obeyed, or dismissing the action or proceeding or any part thereof, or rendering a judgment by default against the disobedient party. . . ."
Fed.R.Civ.P. 37(b)(2)(A)-(C). These remedies also are expressly incorporated into the sanctions available under the Rule governing the failure to respond to a document request. See Fed.R.Civ.P. 37(d).
Rule 26(g)(3) mandates an award of sanctions, including attorney's fees and expenses, against a party or attorney, or both, who have interposed objections to discovery which violate the prohibitions of Rule 26(2)(A)-(C). In addition to this relief, the court may order any other appropriate sanction warranted by the circumstances. Fed.R.Civ.P. 26(g)(3). See PLX, Inc. v. Prosystems, Inc., 220 F.R.D. 291, 296-97 (N.D.W.Va. 2004) ("Rule 26(g)(3) does not limit a court to an award of expenses only, but gives the court latitude to fashion an `appropriate sanction' in addition to an award of expenses"), quoting Poole v. Textron, Inc., 192 F.R.D. 494, 498 (D. Md. 2000); Advisory Committee Notes to 1983 Amendments to Rule 26(g). Applying Rule 26(g)(3), courts routinely impose sanctions for discovery responses which, like Respondents' here, are "objectively unreasonable under the circumstances" and for "meritless objections to discovery requests and partial answers that were evasive and misleading."). PLX, Inc., 220 F.R.D. at 296, quoting Malautea v. Suzuki Motor Co., Ltd., 987 F.2d 1536, 1545 (11th Cir. 1993) and citing Pool v. Textron, 192 F.R.D. at 498.
In this connection, Rule 26(g)(3) is like Rule 37 in that the imposition of sanctions for violations of those Rules is mandatory and non-discretionary unless the court specifically finds certain exculpatory circumstances exist which render the assessment of sanctions unfair and unjust. See Advisory Committee Notes to 1983 Amendments to Rule 26 ("Rule 26(g) makes explicit the authority judges now have to impose appropriate sanctions and requires them to use it. . . . The new rule mandates that sanctions be imposed on attorneys who fail to meet the standards established in the first portion of Rule 26(g)."
Respondents have violated numerous provisions of Rules 37 and 26(g)(2)(A)-(C) and (3) by repeatedly interposing general, boilerplate objections to plaintiffs' document requests and ignoring numerous Orders of the Court, including those of Judge Gardner and Judge Rapoport and the directives of the Master, and by repeating those objections in their November 8, 2006 Response. Defendants' failure to comply with the discovery process should not be viewed in isolation but within the larger context of their other obstructionist tactics which manifest a similar contempt of the discovery obligations by these same parties. See In re Diet Drugs, 2002 U.S. Dist. App. LEXIS 2924 (3d Cir., Feb. 26, 2002) (considering "course of conduct" of counsel in affirming Special Master and District Court dismissal of case for discovery abuse despite severe consequences to innocent client); Wachtel, 2006 U.S. Dist. LEXIS at *31-39 (listing other examples of defendants' discovery abuse in upholding sanctions issued by Magistrate Judge).
In Diet Drugs, the Third Circuit was particularly critical of counsel's repeated assertion of "already-rejected arguments," the precise conduct of Respondents here in reasserting their general, boilerplate objections and refusing to produce documents unilaterally determined by Respondents not to be relevant.
As illustrated by the above analysis, respondents' contention that there is no Order in effect that they have violated, and therefore sanctions against them cannot be imposed is meritless. Judge Gardner and Judge Rapoport have filed written orders related to the subject allegations. SDM directives have been issued, which were not challenged and therefore are the law of the case. It is incumbent upon new counsel to be fully informed as to the law of the case that was developed prior to their entry of appearance.
During the ongoing discovery process, the SDM and counsel agreed on many policies and procedures to streamline the process. Judge Gardner made it clear that new counsel for any party was expected to be as familiar with the case as prior counsel. From the time Martinez and Campbell entered their appearance in this case, they filed objections to every report and recommendation. Even prior counsel, who were zealous advocates for their clients, did not rise to that level of contentiousness.
Respondents argue that the plaintiffs have the burden to prove that legitimate discovery was withheld. There is no case law to support that proposition. If a party knew what was being withheld, it would be easy to request documents with great specificity. However, since the object of discovery is uncovering information, it is impossible to identify what is unknown to exist. There is no way to determine whether a response is incomplete without knowing what it contains.
Respondents claim that they were denied due process because the motion was "informal", i.e. not filed with the Clerk of Court, is vague and did not specify the exact discovery violations alleged by plaintiffs. The requirements of due process are fully satisfied for purposes of an award of discovery sanctions if the party is put on notice of the specific discovery matter at issue, the nature of the Rule 37 and Rule 26 sanctions requested, and is afforded an opportunity to be heard under the standard articulated by the Circuit Court in Beard. See Beard, supra; In re Prudential Ins. Co. of America Sales Prac. Lit., 278 F.3d 175, 191-92 (3d Cir. 2002) (due process met for sanctions under 28 U.S.C. § 1927 when motion and subsequent written notice specifically referred to that statute and further disclosed that movants would seek fees and expenses); Martin v. Brown, 63 F.3d 1252, 1263 (3d Cir. 1995) (motion specifically referring to Rule 37 sanctions and hearing fully complied with due process). See also In re Diet Drug Products Liability Litigation, 2002 U.S. App. LEXIS 2924 (3d Cir., Feb. 26, 2002) (sanction of dismissal of case satisfied due process even when clients were unaware of discovery misconduct by their counsel). Here both Martinez and Campbell were present at the November 15, 2006 meeting and heard the discussion that transpired. Specifically pages 194-229 of the November 15, 2006 transcript contain a discussion among plaintiffs' counsel, Martinez, Campbell and the SDM. The following day, plaintiffs filed a written motion referencing the record of the November 15, 2006 meeting, although not citing the exact pages because the notes had not yet been transcribed. However, if one reads the record, the only pages that contain a discussion involving Capital and Keystone are 194-229. Additionally, defendants were granted a continuance and a briefing schedule at their request, and the hearing was held at a time requested by defendants.
For the foregoing reasons, Keystone, Capital, Crowell, Martinez and Campbell have violated the Federal Rules of Civil Procedure, and plaintiffs have sustained their burden of proof to warrant sanctions.