Opinion
Civil Action No: 97-0775 c/w, 97-0803, 98-2200, Section: "R" (4).
January 31, 2001
ORDER AND REASONS
Before the Court for its consideration is a Motion for Sanctions and Contempt (doc. #503) filed by the defendant, Grinnell Fire Protection's Systems ("Grinnell"), against former third party defendant, West Coast Liquidators ("WCL"). I. Factual and Procedural Background A. The Subpoena
WCL was dismissed by the Court on September 20, 2000, and is therefore no longer a party to this litigation. See doc. #583.
This matter involves a subrogation claim arising out of the March 21, 1996, MacFrugal's warehouse fire in New Orleans, Louisiana. On October 1, 1999, Grinnell served a document subpoena on WCL, with a return date of October 25, 1999. Exhibit "A" to the subpoena enumerated seven (7) separate categories of documents to be produced. Category Nos. 1-4 generally sought production of all post-fire records (i.e., files, documents and correspondence) relating to MacFrugal's New Orleans warehouse and sister facility in Rancho Cucamonga, California. Category Nos. 5-7 requested production of any records identifying the product inventory and storage of plastics at the New Orleans warehouse on the date of the fire. (doc. #503, Exhibit "A").
At the time of the fire, WCL owned MacFrugal's New Orleans warehouse and sister facility in California. WCL entered into a contract with Boardmoor Corporation to design and build its New Orleans distribution center known as the MacFrugal's warehouse. Grinnell subcontracted with Broadmoor to design and install the sprinkler system for McFrugal's warehouse.
B. WCL's Motion to Quash
In response, WCL filed a Motion to Quash on March 25, 1996, requesting that certain portions of the subpoena be quashed. Specifically, WCL objected to Category Nos. 2 3 on relevancy grounds and Nos. 5, 6, 7 on the ground that it would be unduly burdensome to require production by the subpoena's return date. WCL did not object to Category Nos. 1 or 4, but instead represented to the Court that the records requested in Category No. 1 "either do not exist, or they have already been produced via discovery" and that the records requested in Category "No. 4 have already been produced via discovery." (doc. #420).
WCL's motion was set for hearing on November 10, 1999. Grinnell filed a timely opposition.
C. The Court's Order
On December 3, 1999, the undersigned Magistrate Judge denied WCL's Motion to Quash and ordered that within ten (10) days of receipt of the order, WCL must produce: (1) with respect to Category No. 1, written certification that it had produced all relevant documentation and to enumerate for which document requests it did not have responsive discovery; and (2) with respect to Category Nos. 2, 3, 5, 6 7, all responsive documentation in its possession, custody or control. (doc. # 478).
The undersigned's order was not timely objected to or appealed.
D. Grinnell's Motion for Contempt
On January 6, 2000, Grinnell filed the instant motion, contending that WCL had not complied with the undersigned's December 3, 1999 order. According to Grinnell, it wrote to WCL on December 20, 1999, requesting that WCL comply with the Court's order and that it produce all responsive documents. However, on December 27, 1999, WCL responded and advised that it possessed a copy of its broker's claims file regarding the March 1996 fire, but because the post-fire records were not covered by the subpoena, they were irrelevant and would not be produced. (doc. # 503; Exhibits "D" "F").
Approximately one month after Grinnell filed the motion, the District Judge on February 3, 2000, issued a discovery stay order pending the resolution of a jurisdiction issue raised by a Motion to Dismiss for Lack of Subject Matter Jurisdiction filed by the plaintiffs. On July 20, 2000, the District Judge lifted the discovery stay order upon the motion of the plaintiffs. Thereafter, Grinnell re-noticed its motion for hearing before the undersigned on October 4, 2000.
Grinnell contends that the claims file was clearly covered by both the subpoena and this Court's subsequent discovery order and that WCL's suggestion to the contrary is disengenuous. Grinnell requests that the Court find WCL in contempt of court and that it impose appropriate sanctions.
II. The Parties' Contentions A. WCL
WCL filed a timely opposition to Grinnell's motion. In it, WCL submits that it should not be adjudged in contempt of court, because: (1) at the time Grinnell's subpoena was issued and at the time of the hearing on the Motion to Quash, Lloyd Thompson's claims file was beyond the Court's subpoena power; and (2) the claims file was not covered by Grinnell's subpoena and therefore was not covered by the undersigned's December 3, 1999, Discovery Order.
B. The Plaintiffs
In addition to WCL, the plaintiffs have also filed an opposition to Grinnell's motion, suggesting to the Court that WCL should not be held in contempt and that the Court should quash Grinnell's subpoena in so far as it calls for the production of Lloyd Thompson's claims file. First, the plaintiffs contend that the post-fire information contained in the Lloyd Thompson claims file is not relevant to the issues raised in the instant case. Alternatively, the plaintiffs request the Court to issue a protective order, prohibiting production of certain documents contained in the file, which are on plaintiff counsel's letterhead and therefore subject to the attorney client and work product privileges. (doc. #589).
C. Grinnell
In response, Grinnell urges the Court to disregard the plaintiffs' opposition, because as nonparties to the undersigned's December 3, 1999, Discovery Order, they lack standing to challenge WCL's failure to comply. Further, Grinnell contends that the plaintiffs waived any objections it may have had, in so much as they had ample opportunity to raise any issues of interest when the Court considered the subpoena and Motion to Quash over a year ago, but instead failed to do so. Further, neither WCL or the plaintiffs filed a motion to reconsider or an appeal of the undersigned's order. As such, Grinnell maintains that the plaintiffs and WCL are now precluded from arguing the merits of the underlying document request and Motion to Quash. (doc. #597).
Neither WCL or the plaintiffs addressed the issues of standing and waiver.
III. Analysis
Several issues have been presented for the Court's consideration:
(1) Whether the Lloyd Thompson claims file was in the custody, possession or control of WCL and therefore subject to the undersigned's December 3, 1999, Discovery Order;
(2) Whether the Lloyd Thompson claims file was covered by Grinnell's subpoena and therefore subject to the undersigned's December 3, 1999, Discovery Order;
(3) Whether the plaintiffs have standing to challenge WCL's failure to comply with the undersigned's December 3, 1999, order; and
(4) Whether the plaintiffs' objections are timely.
Having set forth the parties' contentions and the relevant issues, the Court will now proceed with its analysis. A. Custody, Possession or Control
WCL and the plaintiffs also contend that in June 1999, counsel for WCL and Grinnell entered into an agreement that WCL would voluntarily attempt to secure and produce Lloyd Thompson's documents regarding the placing of insurance prior the fire. They contend however that WCL never agreed to produce Lloyd Thompson's postfire records. Grinnell, on the other hand, denies that such an agreement was ever made.
The Court notes that neither WCL or the plaintiffs provided the Court with any proof, whether written or otherwise, that such an agreement was in fact made. The Court therefore finds that it is unnecessary to address what effect, if any, such an agreement would have had on WCL's obligation to comply with Grinnell's subpoena and the Court's discovery order.
The threshold issue for the Court's consideration is whether the Lloyd Thompson claims file was in the custody, possession or control of WCL and therefore subject to the undersigned's December 3, 1999, Discovery Order.
Rule 34 of the Federal Rules of Civil Procedure provides that documents or tangible things must be in the possession, custody or control of a party to be discoverable by the other party. See FED. R. Civ. P. 34 (a)(1). However, it is not necessary that a party have actual possession of the documents. In re Folding Carton Antitrust Litigation, 76 F.R.D. 420 (N.D.Ill. 1977). Rather, production may be ordered even though the party has only the legal right to obtain the documents and the documents are beyond the forum court's jurisdiction. Zervos v. S.S. Sam Houston, 79 F.R.D. 593 (S.D.N.Y. 1978). See also Wallace v. Gen. Elec. Co., No. 87-1236, 1988 WL 21909 (E.D. Pa. Mar. 4, 1988), Buckley v. Vidal, 50 F.R.D. 271 (S.D.N.Y. 1970). Furthermore, once a document (or other tangible thing) has been delivered to a party, it is reasonable to presume that the document is in that party's possession, custody or control. Moreover, documents within a party's possession, custody or control are subject to discovery even though they are owned by a nonparty. See Wright Miller, Fed. Prac. Pro. § 2210 (R. 34), § 2210 Possession, Custody or Control (1993); see also, Levin, Depositions and Discovery in Civil Actions, § 249, 23 Am. Jur.2d (1983).
In its opposition memorandum, WCL concedes that it wrote to Lloyd Thompson on August 11, 1999, and requested that it provide WCL with a copy of their file regarding MacFrugal's New Orleans warehouse. (doc. #588, Exhibit "1"). WCL further concedes that in response, Lloyd Thompson (now called JLT Risk Solutions) forwarded a copy of the claims file to its counsel, which was received on November 11, 1999. ( Id. at Exhibit "2").
Clearly the Lloyd Thompson claims file was in the possession, control or custody of WCL at the time of Grinnell's subpoena and the undersigned's December 3, 1999, Discovery Order. Therefore, under Rule 34, WCL was required to produce the Lloyd Thompson claims file within 10 days of the Court's order, unless the file was not covered by the subpoena.
B. Scone of Subpoena
WCL further contends that it should not be held in contempt of court, because the Lloyd Thompson claims file was not included within the scope of the subpoena. The subpoena enumerated seven (7) categories of documents. Relevant to the instant motion are Category Nos. 1, 3 and 4. Specifically, Category No. 1 requested production of:
1.) any and all files, documents, correspondence, memoranda, notes, inspections, reports, reports of inspections by . . . property insurers, indexes, photographs and/or films, plans and drawings, and loss prevention reports relating to the MacFrugal's warehouse located in New Orleans, Louisiana subsequent to March 21, 1996, through the current date.
Category No. 3 of the subpoena requested:
3.) any and all . . . files, proposals, requests, suggestions and/or recommendations referencing and/or concerning, in any way, the New Orleans Distribution Center and Rancho Cucamonga Distribution Center warehouses regarding storage of merchandise, placement of racks, fire prevention methods, fire protection systems including, but not limited to, underground and above ground water fire sprinkler systems subsequent to March 21, 1996, through the current date.
Finally, Category No. 4 requested:
4.) any and all files, documents, correspondence, memoranda, notes, inspections, reports, reports of inspections by . . . . property insurers, indexes, photographs and/or films, plans and drawings and loss prevention reports relating to all claims made by West Coast Liquidators and/or MacFrugal's against their insurers of the contents lost and/or destroyed in connection with the fire at the NODC on March 21, 1996.
(doc. # 420, Exhibit "A") (emphasis added).
The Lloyd Thompson claims file was clearly covered by Category Nos. 1, 3, and 4. WCL's contention that the scope of the subpoena did not include the claims file is without merit.
C. Standing
The plaintiffs have also filed an opposition to Grinnell's motion, suggesting to the Court that WCL should not be held in contempt. Grinnell however urges the Court to disregard the plaintiffs' opposition, because as non-parties to the undersigned's December 3, 1999 order, they lack standing standing to challenge WCL's failure to comply.
"Standing" is a legal term denoting the existence of a party's interest in the outcome of the litigation that will ensure sincere and rigorous advocacy. To have standing, a party must have a legally protected interest that is in jeopardy of being adversely affected. Hoffman v. Hunt, 845 F. Supp. 340 (W.D.N.C. 1994).
However, the order at issue was not directed to the plaintiffs. Therefore, they clearly have no interest in whether WCL actually complied or failed to comply with the Court's Discovery Order. Therefore, it is the Court's opinion that the plaintiffs lack standing to challenge the December 3, 1999, discovery order. Thus, the plaintiffs' objections are moot. D. Sanctions
The Court notes that the plaintiffs do not suggest that they failed to receive notice of the subpoena, the Motion to Quash, or this Court's December 3, 1999 discovery order. In fact, they have not provided the Court with any explanation as to why they did not raise their objections when the Court considered the document request over a year ago. Thus, the Court finds that alternatively the plaintiffs' objections are untimely. See Maxey v. General Motors Corp., No. 95-0060, 1996 WL 692222, *1 (N.D. Miss. Nov. 18, 1996) (noting that although the express language of Fed.R.Civ.P.26 does not set limits within which a motion for protective order must be made, there is an implicit requirement that the motion be timely or seasonable). See also, Wright Miller, 8 Federal Practice Procedure, § 2035 (2nd Ed. 1994) (same).
Rule 37(b)(2) of the Federal Rules of Civil Procedure empowers a district court to impose "just" sanctions against a party who disobey a discovery order. See FED. R. Civ. P. 37(b)(2). Under Rule 37, the court may, among other things, order the dismissal of a claim and the payment of the opposing party's expenses, including attorney's fees. Further, Rule 37 affords a district court considerable, but not unlimited, discretion in fashioning appropriate penalties for those who disobey such an order. Chilcutt v. United States, 4 F.3d 1313, 1320 (5th Cir. 1993), cert. denied, 513 U.S. 979 (1994).
After much consideration, the Court finds that the sanction of reasonable attorney's fees and costs are warranted by the circumstances. First, WCL concedes that in response to Grinnell's December 20, 1999, request that it comply with the Court's December 3, 1999, order and that it produce the Lloyd Thompson claims file, it instructed Grinnell that the post fire records were irrelevant to the instant case and that it would not produce the file. (doc. # 503, Exhibits "D" "F"). However, the Court notes that in its written response to the Court's December 19, 2000, Minute Entry, WCL conceded that it promptly produced the post fire records for the Rancho Cucamonga Distribution Center. (doc. # 634). Finally, WCL concedes that it did not comply with the undersigned's order to provide written certification that it had produced all relevant documents in response to Category No. 1, until over a year later and then only in response to the Court's December 19, 2000, order.
John v. State of Louisiana, 899 F.2d 1441 (5th Cir. 1990) (Magistrate Judge may preside in a proceeding to determine appropriate sanctions under § 636(b)(1)(A)). See also Local Rule 72. 1E (stating that the following pre-trial motions shall be automatically referred to the Magistrate Judge to whom the action is allotted: "all civil discovery motions, contested motions for leave to intervene, to amend, to file a third-party complaint, for extension of time to plead, for a more definite statement and motions relative to attorney representation").
E. Contempt
Failure to produce a pertinent document in a proceeding before a Magistrate Judge, after having been ordered to do so, constitutes a contempt of the district court for the district wherein the Magistrate sits. See 28 U.S.C. § 636 (e). A Magistrate Judge, pursuant to Title 28 U.S.C. § 636 (e), may certify to the District Court Judge (or deny certification of) facts possibly constituting contempt or issue a report and recommendation pursuant to 636(b)(1)(B). The undersigned Magistrate Judge hereby attaches as Exhibit "A", its certification of facts to the presiding District Court Judge for a contempt hearing. Accordingly,
28 U.S.C. § 636 (e) provides that: "[i]n a proceeding before a magistrate, any of the following acts or conduct shall constitute a contempt of the district court for the district wherein the magistrate is sitting: (1) disobedience or resistance to any lawful order, process, or writ; (2) misbehavior at a hearing or other proceeding, or so near the place thereof as to obstruct the same; (3) failure to produce, after having been ordered to do so, any pertinent document; (4) refusal to appear after having been subpoenaed or, upon appearing, refusal to take the oath or affirmation as a witness, or, having taken the oath or affirmation, refusal to be examined according to law; or (5) any other act or conduct which if committed before a judge of the district court would constitute contempt of such court. Upon the commission of any such act or conduct, the magistrate shall forthwith certify the facts to a judge of the district court and may serve or cause to be served upon any person whose behavior is brought into question under this section an order requiring such person to appear before a judge of that court upon a day certain to show cause why he should not be adjudged in contempt by reason of the facts so certified. A judge of the district court shall thereupon, in a summary manner, hear the evidence as to the act or conduct complained of and, if it is such as to warrant punishment, punish such person in the same manner and to the same extent as for a contempt committed before a judge of the court, or commit such person upon the conditions applicable in the case of defiance of the process of the district court or misconduct in the presence of a judge of that court."
See, e.g. In re Hipp, Inc., 895 F.2d 1503, 1511 n. 16 (5th Cir. 1990) (noting in dictum that, because contempt is an inherent Article III power, a Magistrate Judge does not have the authority to decide contempt motions, but must instead certify facts to the District Court Judge.)
IT IS THEREFORE ORDERED that the defendant's Motion for Sanctions and Contempt (doc. #503) is hereby GRANTED IN PART and CERTIFIED TO THE DISTRICT COURT JUDGE IN PART, as follows:
1) The defendant's motion is GRANTED to the extent it seeks an award of reasonable attorney's fees and costs incurred in connection with the subject motion. The defendant should submit the appropriate fee documentation to the Court, no later than 20 days from the entry of this order;
2) The defendant's motion is CERTIFIED TO THE DISTRICT COURT JUDGE to the extent it seeks an order holding WCL in contempt of court. See Exhibit "A".
Exhibit "A"
CERTIFICATION OF FACTS FOR HEARING ON CONTEMPT OF COURT PURSUANT TO TITLE 28 U.S.C. § 636 (e)
2. On October 1, 1999, the defendant, Grinnell Corporation ("Grinnell") served a document subpoena on third party defendant, West Coast Liquidators ("WCL"), with a return date of October 25, 1999. Exhibit "A" to the subpoena enumerated seven (7) separate categories of documents to be produced. Category Nos. 1-4 sought production of records ( i.e. files, documents and correspondence) regarding MacFrugal's New Orleans, Louisiana warehouse, generated subsequent to the March 21, 1996, fire. (Rec. doc. # 503, Exhibit "A").
3. Category No. 1 of the subpoena requested the production of any and all files, documents, correspondence, memoranda, notes, inspections, reports, reports of inspections by consultants, experts and property insurers, indexes, photographs and/or films, plans and drawings, and loss prevention reports relating to the MacFrugal's warehouse located in New Orleans, Louisiana subsequent to March 21, 1996, through the current date.
4. Category No. 3 of the subpoena requested the production of any and all documents, correspondence, files, proposals, requests, suggestions and/or recommendations referencing and/or concerning, in any way, the New Orleans Distribution Center and Rancho Cucamonga Distribution Center warehouses regarding storage of merchandise, placement of racks, fire prevention methods, fire protection systems including, but not limited to, underground and above ground water fire sprinkler systems subsequent to March 21, 1996, through the current date.
5. Category No. 4 of the subpoena requested the production of any and all files, documents, correspondence, memoranda, notes, inspections, reports, reports of inspections by consultants, experts, and property insurers, indexes, photographs and/or films, plans and drawings and loss prevention reports relating to all claims made by West Coast Liquidators and/or MacFrugal's against their insurers of the contents lost and/or destroyed in connection with the fire at the NODC on March 21, 1996.
6. On October 25, 1999, WCL filed a Motion to Quash, requesting that certain portions of the subpoena be quashed. (Rec. doc. #420).
7. Specifically, WCL objected to Category Nos. 2 3 on relevancy grounds and Nos. 5, 6, 7 on the ground that it would be unduly burdensome to require production by the subpoena's return date. Id.
8. WCL did not object to Category Nos. 1 or 4, but instead represented to the Court that the records requested in Category No. 1 "either do not exist, or they have already been produced via discovery" and that the records requested in Category No. 4 "have already been produced via discovery." Id.
9. On December 3, 1999, the undersigned Magistrate Judge denied WCL's Motion to Quash and ordered that within ten (10) days, WCL must produce: (1) with respect to Category No. 1, written certification that it had produced all relevant documentation and to enumerate for which document requests it did not have responsive discovery; and (2) with respect to Category Nos. 2, 3, 5, 6, 7, all responsive documentation in its possession, custody or control. (Rec. doc. #478).
10. The undersigned's order expressly overruled WCL's relevancy objection to Category Nos. 23. Id.
11. WCL did not timely file a motion to reconsider or appeal the undersigned's December 3, 1999, order.
12. WCL concedes that on August 11, 1999, it wrote to Lloyd Thompson (now called JLT Risk Solutions) and requested a copy of Lloyd's file regarding MacFrugal's New Orleans warehouse. (Rec. doc. #588, Exhibit No. "1").
13. WCL admits that in response to WCL's August 11, 1999, letter, Lloyd Thompson sent WCL a copy of its claims file, which was received by WCL's counsel on November 11, 1999. (Rec. doc. # 588, Exhibit No. "2").
14. On December 20, 1999, (Grinnell wrote to WCL and requested that it comply with the undersigned's December 3, 1999, order and that it produce all responsive documents. (doc. # 503, Exhibits "D").
15. In response to Grinnell's December 20, 1999, letter, WCL on December 27, 1999, advised Grinnell that it was in possession of Lloyd Thompson's claims file, but that because the post-fire records were not covered by the subpoena, they were irrelevant and would not be produced. ( Id. at Exhibit "F").
16. WCL concedes that it did not produce Lloyd Thompson's claims file within the time delay provided for in the undersigned's December 3, 1999, order. (Rec. doc. #634).
17. WCL admits however that in response to the undersigned's December 3, 1999, Discovery Order, it produced the post-fire records for MacFrugal's Rancho Cucamonga Distribution Center. Id.
18. On September 20, 2000, the Court dismissed WCL from the litigation. (Rec. doc. #583).
19. On December 19, 2000, the undersigned Magistrate Judge issued a Minute Entry to WCL, ordering it to submit written proof that it complied with the undersigned's December 3, 1999, Discovery Order, in which WCL was ordered to provide the Court with written certification that it produced all relevant documents responsive to Category No. 1. and that it enumerated all documents that could not be produced because it had no responsive discovery in its possession. (Rec. doc. #633).
20. WCL responded to the undersigned's December 19, 2000, order on December 22, 2000. (Rec. doc. #634).
21. WCL concedes that it failed to comply with the undersigned's December 3, 1999, Discovery Order, requiring WCL to certify in writing that it had produced all relevant documents and to list all documents that could not be produced because it had no responsive discovery in its possession. Id.