Opinion
Civil Action No: 99-3440 Section: "K" (1)
April 30, 2001
HEARING ON MOTION
APPEARANCES: Submitted on briefs
MOTION: DANIELI'S MOTION TO COMPEL DISCOVERY FROM PLAINTIFF
GRANTED IN PART AND DENIED IN PART
The defendant, Danieli Corporation ("Danieli"), moves for an order compelling the plaintiff, Bayou Steel Corporation ("Bayou Steel"), on various discovery issues.
A. Compliance with L.R. 37.1.
In its opposition Bayou Steel contends that Danieli has not complied with L.R. 37.1 with respect to several of the issues raised in Danieli's motion to compel. Danieli responds that it did comply and refers to a letter dated, March 30, 2001. Exhibit Q to Rec. doc. 33. On April 16, 2001, Danieli filed its motion for expedited consideration and motion to compel with a 29 page supporting memorandum and 17 supporting exhibits. Rec. doc. 32. The motion and its accompanying certificate are dated, April 13, 2001, and signed by Danieli's counsel in Pittsburgh. Rec. doc. 32. Bayou Steel's counsel states that he was in the offices of Danieli's counsel in Pittsburgh from April 10 through 12, 2001, and no motion to compel was mentioned or discussed.
No motion relative to discovery shall be accepted for filing unless accompanied by a certificate of counsel for the moving party stating that counsel have conferred in person or by telephone for purposes of amicably resolving the issues and stating why they are unable to agree or stating that opposing counsel has refused to so confer after reasonable notice. Counsel for the moving party shall arrange the conference. Any motion filed under this paragraph shall be noticed for hearing. If the court finds that opposing counsel has willfully refused to meet and confer, or, having met, willfully refused or failed to confer in good faith, the court may impose such sanctions as it deems proper.
L.R. 37.1. Prior to filing a motion to compel the parties are required to attempt to resolve and at least narrow their differences by conferring in person or by telephone. It is the movant's responsibility to initiate the conference. Exchanging letters may be a step in the process, but it is not a substitute for such a conference. Where the parties are together in depositions for the three days preceding the service of the motion, there is no reason why they could not have complied with both the letter and spirit of L.R. 37.1. It is the undersigned's belief that such a conference would have narrowed the issues that are presented in the motion.
Because of the time constraints confronting the parties, the undersigned will take up each of the issues raised by Danieli. The parties are cautioned that any further motion to compel will be denied unless there is full compliance with L.R. 37.1.
B. Danieli's discovery of Bayou Steel's damages.
Danieli shows that its first set of interrogatories served on January 11, 2001, included Interrogatory 16, which requested detailed information from Bayou Steel in support of its damage claim. Bayou Steel's response served on February 12, 2001, was: (1) an objection on the basis of work product and attorney-client privilege; (2) prematurity; and (3) the statement that damages would be the subject of expert testimony and expert discovery would be provided in accord with the Court's pretrial orders. Exhibit F and G to Rec. doc. 33. Danieli demanded a supplemental response to Interrogatory 16 by letter dated, March 1, 2001. Exhibit H to Rec. doc. 33. In support of this motion Danieli states, "Bayou Steel has not produced discoverable evidence in support of its alleged damages against Danieli in this Action." Rec. doc. 33 at 15.
Bayou Steel responds that it produced its financial expert's report on April 4, 2001, accompanied by detailed financial calculations and summaries of supporting information. Rec. doc. 40 at p. 8. Bayou Steel alleges there was an April 12, 2001, meeting between counsel where Bayou Steel offered to produce the underlying documentation during the week of April 16, 2001, and that Danieli and its financial expert reviewed these documents on April 20, 2001. Rec. doc. 40 at p. 10. Bayou Steel states that it supplemented its answer to Interrogatory 16 in a letter dated March 19, 2001, where it stated that its damages included certain costs. For example, the letter refers to the costs for labor and materials to replace the first bearing on the Electric Arc Furnace installed by Danieli in Bayou Steel's Melt Shop. Exhibit I to Rec. doc. 33. Bayou Steel concludes by saying, "Danieli has the information and documents underlying Bayou Steel's damages in this case." Rec. doc. 40 at p. 10.
Danieli disputes the significance of the April 12, 2001, discussion. Danieli says that it had been seeking the underlying damage information for the preceding eight months and that, even on April 12, 2001, Bayou Steel could not supply a firm date for its production. It shows that it served a request for production of document in June, 2000, where it sought, "all documents relating to the calculation of any damages claimed by Bayou Steel. . . ." Exhibit A to Rec. doc. 33. Bayou Steel objected on August 31, 2000, that the request was premature. Exhibit B to Rec. doc. 33.
Danieli contends that even after reviewing the proffered documents on April 20, 2001, the damage document production remains incomplete, and cites the following examples which have not been produced:
1. The codes that are critical to any understanding of the records;
2. The first pages of the key items of historical reports from Bayou Steel;
3. "Key Indication Reports" for Fiscal Years 1998 through 2000;
4. Daily Production Summaries for May 1, 1999, through December 31, 2000;
5. Budget information on which Bayou Steel's overhead application rate is based;
6. Listing of job codes for workers hours being charged to Danieli;
7. Fixed and variable cost allocations which are being charged to Danieli;
8. Revenue allocations relative to heats or time periods which are being charged to Danieli;
9. Financial Statements for Fiscal Years 1997 through 2000; and
10. Tax return information supporting the revenues allegedly claimed as lost by Bayou Steel and charged to Danieli.
Danieli's reply memorandum in support of motion to compel discovery at p. 5, n. 4. Danieli also states that Bayou Steel failed to produce documents supporting its alleged productivity and efficiency losses, while Bayou Steel claims in excess of $1.5 million in damages for these losses. Bayou Steel's narrative responses to Danieli's interrogatories show that Bayou Steel contends it was required to use an older and less efficient furnace when the bearings and welds failed on the new furnace.
While it is understandable that Bayou Steel would want to withhold producing documents relating to its damage claim until the completion of the report of its financial expert, there is no reason why much of the supporting documentation of the damage claim could not have been produced earlier. For example Bayou Steel claims the cost of labor and materials to replace the first bearing, second bearing and make weld repairs. It is highly unlikely that Bayou Steel needed Ken Boudreaux to tell it the cost of the materials to replace the two bearings and make the weld repairs. The same can be said of the direct labor costs of such repairs. Perhaps Dr. Boudreaux had a role in the calculation of the indirect costs, but this would not have prevented Bayou Steel from producing documents relating to its damages until April 20, 2001. The first bearing was replaced in June 1999, and the second in July or August of 1999. The weld repairs to the roof lifting column must have commenced shortly after the separation occurred in January, 2000. Bayou Steel has known some of its damages for nearly two years.
Bayou Steel states it has produced 4,500 documents, so it may have produced documents showing some of the elements of its damages prior to producing Dr. Boudreaux's report and the supporting documents on April 20, 2001. The parties do not address this issue.
If it was advantageous for Bayou Steel to wait until the completion ofDr. Boudreaux's report to produce any documents supporting its damage claim, ironically it was aided and abetted by Danieli which waited until April 16, 2001 to file a motion to compel. If Danieli had acted earlier, it would have permitted the parties and the Court to respond more deliberately.
The crux of the problem is that Danieli is up against the May 4 deadline for submission of its expert reports, but it contends that it is missing documents that are critical to its evaluation of Bayou Steel's claim for damages. Considering that Danieli took the depositions of three Bayou Steel representatives in March and was furnished Dr. Boudreaux's report with at least some (Bayou Steel contends all) supporting documentation, Danieli must be able to identify with particularity the remaining documents that it requires to evaluate Bayou Steel's damage claim. The parties are past the stage of making blanket requests for production of documents.
With respect to the issue of damage discovery from Bayou Steel the parties shall do the following:
1. Within five (5) calendar days of the transmittal of this minute entry to the parties by fax, Danieli shall serve Bayou Steel by fax with a list of the specific documents that it requires to complete its evaluation of Danieli's damages.
2. Within five (5) calendar days of the service of Danieli's list, Bayou Steel shall respond in writing and produce for inspection and copying all documents responsive to the list.
3. If Bayou Steel objects to producing any of the documents sought by Danieli on account of the attorney-client privilege or the work product doctrine, it shall comply with following:
a. Each page of the documents withheld from production shall be separately numbered. A privilege log will be prepared and submitted to Danieli within five (5) calendar days of the service of Danieli's list. The privilege log shall include a detailed description of the contents of EACH DOCUMENT, including the page numbers, date, description, originator, recipients and the nature of the privilege asserted. Attachments are considered separate documents.
b. Within five (5) calendar days of the submission of the privilege log counsel for Danieli and Bayou Steel shall meet and confer in person or by telephone concerning
EACH DOCUMENT.
c. If the parties are unable to resolve all the privilege issues after meeting, within five (5) calendar days of the meeting Bayou Steel shall a file a motion to sustain the privilege that shall include the following:
i. A certificate showing that the parties have met and conferred;
ii. A revised privilege log that shall include a detailed description of the contents of EACH DOCUMENT that remains in contention after the conference described above.
iii. Copies of only the documents that remain in contention and require in camera inspection.
c. Within five (5) calendar days of the filing of Bayou Steel's motion, Danieli shall provide a memorandum in support of its position that separately addresses EACH
DOCUMENT.
C. Danieli's First Set of Interrogatories to Bayou Steel.
Danieli requests an order requiring Bayou Steel to provide full and complete responses to Danieli's first set of interrogatories. Exhibit F to Rec. doc. 33. The undersigned has reviewed Bayou Steel's responses to Danieli's first set of interrogatories. Exhibit G to Rec. doc. 33. Bayou Steel provided a detailed narrative explanation of the events associated with the failures of the two bearings and the weld support for the Electric Arc Furnace in response to three of the interrogatories. Bayou Steel answered some of the other interrogatories, but objected to the contention interrogatories as premature. Since then Danieli has deposed the representatives of Bayou Steel identified by it in the interrogatories responsive information. Danieli has had the opportunity to probe these witnesses on Bayou Steel's contentions. Aside from Bayou Steel's response to the damage interrogatory discussed above, and the identification of documents discussed below, its responses to Danieli's first set of interrogatories are sufficient.
Danieli shows that Bayou Steel failed to provide the verification required by Fed.R.Civ.P. 33 in Bayou Steel's supplemental responses that were contained in letters from counsel for Bayou Steel. Bayou Steel responds that it will provide the requested verification. The verification will be provided within five (5) calendar days of this order.
Danieli contends that Bayou Steel improperly responded to the interrogatories by stating that it has already produced the business records from which the answer may be derived and the burden on Danieli of deriving the answer is substantially the same as that on Bayou Steel. See for example Bayou Steel's response to interrogatory no. 4 in Exhibit G to Rec. doc. 33. Danieli presents authority requiring the party to specifically identify the documents from which the answer may be derived rather than a blanket reference to the 4,500 documents previously produced. See Herdlein Technologies, Inc. v. Century Contractors, Inc., 147 F.R.D. 103, 105 (W.D.N.C. 1993). Bayou Steel contends that its broad document reference is a direct function of the "outrageously broad scope" of the interrogatories. Rec. doc. 40 at p. 17.
Bayou Steel's blanket reference to the previously produced documents is inadequate with respect to the following interrogatories: interrogatory 5 — all instances in which the furnance was repaired; interrogatory 6 — the first bearing failure; interrogatory 7 — the second bearing failure; interrogatory 8 — the weld support failure; and interrogatory 15 — the examination and testing of the furnace. Within seven (7) calendar days of the receipt of this minute entry by fax Bayou Steel shall supplement its response to these interrogatories to identify the business records from which Danieli may derive the answers.
D. July 1, 1999, letter from Glenn Claypool of Bayou Steel to its counsel, Howard Sinor.
Exhibit N to Rec. doc. 40 is a July 1, 1999, letter from Glenn Claypool of Bayou Steel to its counsel, Howard Sinor. In the letter Claypool describes the highlights of a discussion on that same date between Claypool and a representative of Danieli concerning the replacement of the No. 1 Electric Arc Furnace swing bearing and base. Claypool also describes a second discussion that same day with the Danieli representative. Finally, Claypool itemizes the costs that needed to be quantified in order to understand any agreement with Danieli. Claypool does not solicit any advice from his attorney and he does not record any advice previously given by the attorney.
Bayou Steel contends that the document was inadvertently included within the production of over 4,500 documents to Danieli. Apparently Bayou Steel did not learn of its mistake until some months after the production, when Danieli attempted to use the document at a deposition of one of the representatives of Bayou Steel. Bayou Steel instructed its witnesses to refuse to answer any questions concerning the document, and demands the return of all copies of the letter. Danieli demands the right to depose Bayou Steel's representatives on the letter.
Bayou Steel agrees that under Alldread v. City of Grenada, 988 F.2d 1425 (5th Cir. 1993), the undersigned must consider five factors to determine whether the inadvertent disclosure of a privileged documents constitutes a waiver of the attorney-client privilege:
1. The reasonableness of precautions taken to prevent disclosure;
2. The amount of time taken to remedy the error;
3. The scope of discovery;
4. The extent of the disclosure; and
5. The overriding issue of fairness.
Id. at 1433. For purposes of this ruling the court assumes the communication is privileged. Given the volume of documents produced, the undersigned assumes that the precautions taken by Bayou Steel to prevent disclosure were reasonable. The passage of time works against Bayou Steel. The scope of discovery in this matter is substantial, so the possibility of a privileged communication slipping through the cracks is heightened. The disclosure was complete. Considering the content of the communication and the fact that it was prepared some months prior to the commencement of the litigation, the issue of fairness weighs in favor of waiver. If the document had been prepared by Bayou Steel's counsel or reflected advice of counsel, the issue may be resolved differently. Under all of the circumstances and after consideration of the factors described in Alldread, the undersigned concludes that Bayou Steel waived the attorney-client privilege when it produced the July 1, 1999, letter to Danieli.
Danieli may question the corporate representatives of Bayou Steel on the letter and the limited further questioning should be done by telephone unless the parties otherwise agree. The deposition should be scheduled within fifteen (15) calendar days.
E. Danieli's request for the continuance of the corporate deposition on information not produced until after the depositions of Bayou Steel's designated representatives were completed.
Danieli shows that prior to the depositions of the corporate representatives of Bayou Steel it sought the identity of the individuals providing the factual information included in Bayou Steel's answers to Danieli's interrogatories. Danieli was not provided this information until after the depositions, so it contends it is entitled to re-depose the representatives of Bayou Steel.
Danieli has not shown any instance where the failure to have this information prior to the depositions prevented it from discovering pertinent information during the depositions. In the absence of some specific showing of prejudice, the undersigned will not order the resumption of the depositions to question the representatives about their input into the answers to the interrogatories. Bayou Steel will have to produce its representatives for questioning concerning the July 1, 1999, letter. Danieli will also be permitted to examine Bayou Steel's representative on any damage documents that Bayou Steel produces pursuant to this minute entry that were not previously produced by it. Those documents are to be marked in advance of the deposition and supplied to Bayou Steel's counsel so that the witness may refer to them during the telephone deposition.
F. Appearance of Howard Sinor for deposition as a fact witness.
Danieli argues that discovery has shown that Mr. Sinor, Bayou Steel's trial attorney in this action, was primarily responsible for drafting and negotiating the contract for the Electric Arc Furnace equipment purchased from Danieli. Bayou Steel disagrees and shows with quotations from the transcript of the deposition of Shelley Rome, one of the representatives of Bayou Steel, that she identified herself as primarily responsible for negotiating the contract. Exhibit J to Rec. doc. 40. Rome acknowledged that she sought assistance and counsel from Mr. Sinor. Bayou Steel also shows that in Danieli's motion for summary judgment (Rec. doc. 31), Danieli argues that there are no genuine issues of material fact regarding the contract provisions at issue in the case. More, importantly, Danieli has not made any showing that Rome was unable to answer any question concerning the negotiation and preparation of the contract. Danieli's request for Mr. Sinor's deposition is denied.
G. Danieli's request for sanctions.
Danieli's request for sanctions is denied.
H. Danieli's other relief.
Danieli's motion also seeks an extension of the pretrial deadlines and the continuance of the trial date and pretrial conference. Since the filing of the motion to compel, Danieli has placed these matters before United States Judge Duval and the undersigned will not rule on them.
It is ORDERED that Danieli's motion to compel discovery from Bayou Steel is GRANTED in part and DENIED in part in part in accord with this minute entry.