Opinion
C/A 6:20-cv-2156-TMC-JDA
03-24-2022
Marta Gomez, Plaintiff, v. Easlan Management, Defendant, v. 2207 wh LLC, Handford Capital, passiveinvesting.com, Capstone Apartment Partners, 2207 wade Hampton Manager, LLC, Interested Parties.
REPORT AND RECOMMENDATION OF MAGISTRATE JUDGE
Jacquelyn D. Austin United States Magistrate Judge
This matter is before the Court on Plaintiff's motion for contempt, for sanctions, and to compel compliance. [Doc. 57.] Plaintiff, represented by counsel, brings this action alleging race/national origin discrimination pursuant to Title VII of the Civil Rights Act of 1964, as amended (“Title VII”), and race discrimination pursuant to 42 U.S.C. § 1981. [Doc. 10.] Pursuant to the provisions of 28 U.S.C. § 636(b)(1)(A) and Local Civil Rule 73.02(B)(2)(g), D.S.C., all pretrial matters in this employment discrimination action are referred to the undersigned United States Magistrate Judge for consideration.
Plaintiff moves to hold 2207 wh LLC, Handford Capital, and passiveinvesting.com (the “Investor Entities”) in contempt of court; however, the undersigned magistrate judge does not have the authority to hold a party in civil contempt in a case such as the present one, where the case is not a misdemeanor case and the magistrate judge is not presiding with the parties' consent under 28 U.S.C. § 636(c). 28 U.S.C. § 636(e). Rather, the undersigned can only certify factual findings and refer the issue to the presiding district court judge, who can decide whether to enter a civil contempt order. Id.; Proctor v. State Gov't of N.C. , 830 F.2d 514, 521 (4th Cir. 1987). Thus, the undersigned construes Plaintiff's motion as a motion to certify to the district court facts supporting holding the Investor Entities in civil contempt, for sanctions, and to compel compliance. See Hanwha Azdel, Inc. v. C&D Zodiac, Inc., No. 6:12-cv-00023, 2013 WL 12314518, at *1 n.1 (W.D. Va. Nov. 14, 2013).
BACKGROUND
Plaintiff filed this action on June 5, 2020, and filed an Amended Complaint on August 5, 2020. [Docs. 1; 10.] In her Amended Complaint, Plaintiff alleges that she is Hispanic, of Puerto Rican descent, and was hired by Defendant in April 2018 to serve as the property manager for an apartment complex formerly known as Hampton Forest Apartments, located at 2207 Wade Hampton Boulevard in Greenville, South Carolina. [Doc. 10 ¶¶ 4-5.] In December 2018, Hampton Forest Apartments was acquired by an entity controlled by principals Dan Handford of Handford Capital, Danny Randazzo of Randazzo Capital, and Brandon Abbott (the “Principals”), all of passiveinvesting.com. [Id. ¶ 7.] The Principals, through 2207 wh LLC, acquired the property, rebranded it as “2207 North, ” and invested $1.9 million in renovations. [Id. ¶ 9.] Plaintiff and Codrington, a black female leasing agent who was hired through a temporary firm, were considered “the face” of the property and were responsible for marketing the property and meeting with potential tenants. [Id. ¶¶ 10-11; Doc. 11 ¶ 10.]
Ultimately, a conflict arose between the Principals and Defendant, and Plaintiff and Codrington were terminated and replaced with white individuals. [Doc. 10 ¶¶ 17, 19, 21.] Plaintiff contends that the Principals wanted her and Codrington to be replaced. [Id. ¶¶ 20, 29.] Plaintiff filed a Charge of Discrimination with the Equal Employment Opportunity Commission and has received a Notice of Right to Sue. [Id. ¶ 24.] Thereafter, Plaintiff commenced this action for discrimination and asserts causes of action for discrimination under Title VII [id. ¶¶ 26-29] and § 1981 [id. ¶¶ 30-32].
PROCEDURAL HISTORY
On April 26, 2021, the undersigned granted in part Plaintiff's motion to compel compliance with records subpoenas as to the Investor Entities and ordered the Investor Entities to produce, by May 24, 2021, all documents responsive to item numbers 3(f), 3(g), 4(f), and 4(g) in the subpoenas (the “Subpoena Order”). [Doc. 49.] On May 4, 2021, Plaintiff filed objections to the Subpoena Order, and she supplemented her objections on July 18 and 20, 2021. [Docs. 53; 73; 74.]
Item numbers 3(f), 3(g), 4(f), and 4(g) in the subpoenas requested the following from the “Owner Group, ” which they defined as “(a) Dan Hanford, (b) Danny Randazao, (c) Brandon Abbott or (d) 2207 wh LLC; (e) passiveinvesting.com, LLC, (f) Handford Capital or any investor or managing agent of these entities jointly or severally”:
3. All communications from July 1, 2018 to the present, including electronic communications, between members of the Owner Group regarding:
f. Marta Gomez.
g. Elisha Codrington[.]
4. All communications from July 1, 2018 to the present, including electronic communications, between any member(s) of the Owner Group and Easlan Management regarding:
f. Marta Gomez.
g. Elisha Codrington[.][Docs. 20-1 at 5-6; 20-3 at 5-6; 28-1 at 5-6 (emphasis omitted).]
The objections are pending before United States District Judge Timothy M. Cain.
On June 16, 2021, Plaintiff filed a motion for contempt, for sanctions, and to compel compliance, arguing that the Investor Entities had not complied with the Subpoena Order. [Doc. 57.] The Investor Entities filed a response in opposition to the motion on June 30, 2021, asserting that they did not produce documents responsive to the subpoenas and Subpoena Order because Plaintiff had filed objections to the Subpoena Order and was seeking to have it vacated and that it would have been more efficient to wait for the Court's ruling on the objections before engaging in a search for responsive documents. [Doc. 61.] However, because “Plaintiff appears to be asking this court to enforce the same order [s]he is asking the District court to vacate, out of an abundance of caution the Investor [E]ntities” sent Plaintiff documents that were responsive to the subpoenas and the Subpoena Order. [Id. at 2.] Plaintiff filed a reply on July 1, 2021, arguing that a finding of contempt is compelled because the Investor Entities “offer[ed] no excuse, let alone an adequate one” for failing to respond to the subpoenas and Subpoena Order. [Doc. 63 at 1.] Additionally, the Investor Entities asserted that the late production was problematic because the Investor Entities “did not search emails to and from Plaintiff and Codrington to look for” responsive documents and because many pages of the production were illegible and unusable. [Id. at 3-4.]
The undersigned took the motion under advisement on July 2, 2021, because the motion seeks sanctions related to the undersigned's Subpoena Order, to which Plaintiff has filed objections. [Doc. 66.] Accordingly, the undersigned had planned to issue a recommendation on the motion for contempt, for sanctions, and to compel compliance after Judge Cain rules on the pending objections. [Id.] However, since taking the motion under advisement, the parties and the Investor Entities have been able to resolve various discovery disputes without Court intervention. [See Docs. 58 (Plaintiff's motion to compel and request to expedite); 67 (joint certification indicating that Docket Entry Number 58 had been resolved); 72 (Plaintiff's motion to compel depositions and request to expedite); 76 (Plaintiff's withdrawal of Docket Entry Number 72); 78 (the Investor Entities' reply and request for attorney's fees); 82 (the Investor Entities' request to withdraw their request for attorney's fees).] Therefore, on August 16, 2021, in an attempt to move discovery along in this case, the undersigned directed counsel for the parties and the Investor Entities to conference in a good faith effort to resolve the instant dispute without Court intervention and to file with the Court a joint report as to whether the motion had been resolved. [Doc. 84.]
Despite the Court's direction to file a joint report, Plaintiff's counsel and the Investor Entities' counsel, apparently unable to agree on a joint report, filed individual reports outlining their positions regarding the remaining dispute(s) related to Plaintiff's motion for contempt, for sanctions, and to compel compliance. [Docs. 86; 87; 88.] Plaintiff argues that the Investor Entities did not comply with the Subpoena Order because they searched “only the computers [the Principals] personally use” and did not search “the computers used by Plaintiff and Codrington.” [Doc. 87 at 2-3.] Plaintiff asserts that the email addresses used by her and Codrington were handled by POP3 servers, a type of server that downloads messages locally, removing them from the server and maintaining them on individual computers. [Id. at 4.] She further contends that Defendant has not been able to verify whether the email domains used by Plaintiff have been searched and that the Investor Entities owned the domains. [Id. at 3-4.] Finally, Plaintiff asserts that the Investor Entities owned the computers used by Plaintiff and Codrington until such ownership “transferred to different and unrelated entities along with the conveyance of the real property” on June 30, 2021, yet the Investor Entities “made no effort to search the two computers they owned, which, months later, are now apparently owned by a different company.” [Id. at 3-4 & n.4.]
Plaintiff seems to concede that the computers Plaintiff and Codrington used are not likely to contain documents responsive to item numbers 3(f) and 3(g) in the subpoenas because those items requested communications between members of the Owner Group. [Doc. 87 at 2 n.3.] However, Plaintiff contends that the computers Plaintiff and Codrington used could contain “communications between owners and [Defendant] (of which Plaintiff was a representative) that are responsive.” [Id.]
The Investor Entities, however, assert that they have fully complied with the Subpoena Order because they have searched the servers they use to send and receive emails and “have produced all emails, which discuss either Plaintiff, or Ms. Cod[rington], sent or received by” the Principals “to one another or Easlan” Management. [Doc. 86 at 4.] They agree with Plaintiff that the emails “were sent through a ‘pop server' which would immediately download the email from the server to the user's computer.” [Id.] However, they assert that although the Investor Entities originally purchased the computers used by Plaintiff and Codrington, “Defendant Easlan has at all times had possession of these computers” and “Plaintiff has not stated what actions the Defendant Easlan has taken to search these computers” or “any reason that the Defendant Easlan, who has possession and is using the computers, cannot search them.” [Id.]
Recognizing the need to impress upon the parties the importance of moving forward with discovery because of the pending Scheduling Order deadlines, the undersigned held a status conference on September 7, 2021. [Docs. 89; 90.] At the status conference, the parties indicated they needed additional time to figure out who now has access to the computers that were used by Plaintiff and Codrington. The undersigned, therefore, directed the parties to file status reports by September 21, 2021. [Doc. 90.]
In its status report, Defendant reports that it “believe[s] all documents and data have been produced that Easlan had in its possession or was otherwise a recipient [of]. Out of an abundance of caution, [Defendant's] counsel communicated with the property owners of 2207 North on June 29 regarding the data server for 2207 North and the sale of the property.” [Doc. 93 ¶ 4.] Defendant further reports that because of the sale of the property, it “no longer manages 2207 North and lost access to the data server for that location.” [Id. ¶ 5.] Finally, Defendant “believes all communications requested have been produced.” [Id. ¶ 7.]
In their status report, the Investor Entities reiterate that the emails in question were handled through a pop server, which means the messages were not held on a server but instead were downloaded to the computers that Plaintiff and Codrington used, which were located at the property. [Doc. 92 at 1.] The Investor Entities contend that they were ordered to produce communications between their owners and between their owners and Defendant about Plaintiff and Codrington, and any responsive communications they have would be from the email servers they searched. [Id. at 2, 3.] They further contend that they would not have used the email domains at issue to communicate with Defendant or with each other. [Id. at 2.] Therefore, the Investor Entities argue they have fully complied with the subpoenas and Subpoena Order. [Id. at 4.]
In her status report, Plaintiff asserts that “[n]ot only have [the Investor Entities] not complied with the [Subpoena] Order” by not searching the computers that were owned by them and used by Plaintiff and Codrington, “but they have apparently frustrated the ability of Defendant to respond to discovery and to rectify any issues resulting from [their] noncompliance.” [Doc. 94 at 1.]
DISCUSSION
Rule 45(g) of the Federal Rules of Civil Procedure provides that a court “may hold in contempt a person who, having been served, fails without adequate excuse to obey the subpoena or an order related to it.” A court may hold a party in civil contempt if four elements are established by clear and convincing evidence:
The Court notes that none of the parties addressed the standard the Court must apply to hold a party in civil contempt.
(1) the existence of a valid decree of which the alleged contemnor had actual or constructive knowledge; (2) that the decree was in the movant's favor; (3) that the alleged contemnor by its conduct violated the terms of the decree, and had knowledge (at least constructive knowledge) of such violations; and (4) that the movant suffered harm as a result.United States v. Ali, 874 F.3d 825, 831 (4th Cir. 2017) (internal quotation marks omitted). The Supreme Court has emphasized that a court may exercise its contempt power only if there is no “fair ground of doubt as to the wrongfulness of” the conduct at issue. Taggart v. Lorenzen, 139 S.Ct. 1795, 1801 (2019) (emphasis and internal quotation marks omitted). Accordingly, holding the party in contempt is appropriate only when the party can “discern from the language of a court's order the actions necessary to comply with the court's directive.” Life Techs. Corp. v. Govindaraj, 931 F.3d 259, 268 (4th Cir. 2019).
A magistrate judge's contempt authority is outlined in 28 U.S.C. § 636(e). For cases such as the present one, where the case is not a misdemeanor case under 18 U.S.C. § 3401 and the magistrate judge is not presiding with the parties' consent under 28 U.S.C. § 636(c), the magistrate judge's contempt authority is provided in 28 U.S.C. § 636(e)(6)(B)(iii). That subsection provides that when an “act constitutes a civil contempt, ”
the magistrate judge shall forthwith certify the facts to a district judge and may serve or cause to be served, upon any person whose behavior is brought into question under this paragraph, an order requiring such person to appear before a district judge upon a day certain to show cause why that person should not be adjudged in contempt by reason of the facts so certified. The district judge shall thereupon 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 district judge.28 U.S.C. § 636(e)(6)(B)(iii).
The applicable facts are set forth above, and the undersigned concludes that they do not justify finding the Investor Entities in contempt. At issue is the Subpoena Order, which granted in part Plaintiff's motion to compel compliance with records subpoenas as to the Investor Entities. [Doc. 49.] The Subpoena Order was clearly in the favor of the movant, Plaintiff, and the alleged contemnors, the Investor Entities, had actual or constructive knowledge of the Subpoena Order insofar as their counsel received a notice of electronic filing regarding the Order. The Subpoena Order required the Investor Entities to produce, by May 24, 2021, “[a]ll communications from July 1, 2018 to the present, including electronic communications, between any member(s) of the Owner Group and Easlan Management regarding: . . . [Plaintiff and] Elisha Codrington.” [Id. at 6-7 (citing Docs. 20-1 at 5-7; 20-3 at 5-7; 28-1 at 5-7), 9, 12).] The question at issue here is whether the Investor Entities knowingly violated the Subpoena Order.
The Subpoena Order also required the Investor Entities to produce “[a]ll communications from July 1, 2018 to the present, including electronic communications, between members of the Owner Group regarding: . . . [Plaintiff and] Elisha Codrington.” [Doc. 49 at 6 (citing Docs. 20-1 at 5-7; 20-3 at 5-7; 28-1 at 5-7), 9, 12).] However, as stated, Plaintiff seems to concede that the computers and emails at issue are unlikely to contain documents responsive to item numbers 3(f) and 3(g) in the subpoenas because those items requested communications between members of the Owner Group. [Doc. 87 at 2 n.3.] Accordingly, the Court focuses its discussion on item numbers 4(f) and 4(g) in the subpoenas.
Plaintiff and the Investor Entities dispute whether the Investor Entities are required to search Plaintiff's and Codrington's emails. Plaintiff argues they are required to search the computers because the Investor Entities owned the email domains and the computers where the email messages were downloaded locally. [Docs. 87 at 3-4; 94 at 1-2.] On the other hand, the Investor Entities argue they searched the servers the Principals use to send and receive emails, they would not have used the email domains at issue, and that, although they originally purchased the computers used by Plaintiff and Codrington, Defendant had possession of the computers until the property was sold. [Docs. 86 at 4; 92 at 1-3.] Based on the record before the Court, the undersigned cannot find that the Investor Entities knowingly violated the Subpoena Order.
“Rule 45 expressly permits a party to issue discovery subpoenas to a nonparty for documents and things in the nonparty's possession, custody, or control.” In re Rule 45 Subpoena Issued to Robert K. Kochan, No. 5:07-MC-44-BR, 2007 WL 4208555, at *4 (E.D. N.C. Nov. 26, 2007) (citing Fed.R.Civ.P. 45(a)(1)(C)). Accordingly, the Subpoena Order required the Investor Entities to search the documents in their possession, custody, or control and to produce responsive documents. That is exactly what the Investor Entities did by searching their servers for communications between their owners and between their owners and Defendant. Although Plaintiff contends they should have searched the computers that were located at the property, the Investor Entities have established that those computers were not in their possession, custody, or control.
The Investor Entities' Rule 30(b)(6) deponent testified that 2207 wh LLC owns the domain 2207north.com and that the emails for 2207north.com are through a hosting service that uses POP3 emails, which means the server downloads the emails to a person's computer and deletes it from the server once it is downloaded. [Doc. 94-2 at 5-6.] Therefore, any emails to and from 2207north.com “would have been housed on the computers that were located on the property.” [Id. at 6.] The deponent also testified that the Investor Entities “did not have access to” the computers and that Defendant would have had access “[b]ecause they're the onsite management company that has access to the computers where the e-mails were housed.” [Id. at 8.] Further, the deponent testified that although 2207 wh LLC owned the computers that Plaintiff and Codrington used because they “owned the property and the assets within it, ” “access to those computers is given to the property management company when they are managing the asset”; therefore, the Investor Entities never had access to the computers. [Id. at 9-10.] Accordingly, the undersigned finds that the Investor Entities did not knowingly violate the Subpoena Order. See Rollins Ranches, LLC v. Watson, No. 118-3278-SAL-SVH, 2021 WL 1138022, at *13 (D.S.C. Feb. 24, 2021) (declining to certify facts to the district judge for contempt proceedings because a dispute remained regarding whether the defendant was required to provide access information to social media accounts she claimed were not her own and the plaintiffs had not put forth argument or case law in support of their position that she was required to provide access information to those accounts). Notably, Plaintiff and Codrington were employees of Defendant, not the Investor Entities, and the record establishes that the emails were not stored on a server such that the Investor Entities had access to them and that, although the Investor Entities purchased the computers, they were used by Defendant's employees and remained at the property managed by Defendant. Cf. Dippel v. South Carolina Farm Bureau Mut. Ins. Co., No. 4:16-cv-1605-RBH-TER, 2019 WL 3387969, at *7 (D.S.C. July 27, 2019) (finding that an employee was Defendant's employee, not the subpoenaed entity's employee, and thus, an email was not in the subpoenaed entity's possession, custody, or control), aff'd, 2019 WL 4016229 (D.S.C. Aug. 26, 2019).
Moreover, in light of Plaintiff's pending objections, the undersigned cannot find that the Investor Entities knowingly violated the Subpoena Order by not producing responses by May 24, 2021. Plaintiff contends that she “did not object to the [Subpoena] Order regarding 3(f), 3(g), 4(f), or 4(g)” and was not seeking to have the Subpoena Order fully vacated [Doc. 63 at 1 n.1]; however, Plaintiff's objections specifically argue that “[t]o the extent the Order is not fully vacated, Plaintiff also seeks the striking of the section of the Order entitled ‘Notice to Counsel'” [Doc. 53 at 1 (emphasis added); see also Id. at 18]. Thus, as of May 4, 2021, the status of the Subpoena Order and what the Investor Entities would be required to produce was in question. Indeed, as stated, the undersigned initially took the motion for contempt, for sanctions, and to compel compliance under advisement because Plaintiff had filed objections to the Subpoena Order. [Doc. 66.] Although the better course would have been for the Investor Entities to request that the Court extend or stay their production deadline, the undersigned cannot find that their delayed production was a knowing violation of the Subpoena Order.
Because the undersigned finds that the Investor Entities did not knowingly violate the Subpoena Order, the Court need not reach the question of whether it has been established by clear and convincing evidence that Plaintiff has suffered any harm. However, the undersigned notes that the parties and the Investor Entities have devoted much of their briefings to discussing who owned the computers, where the computers were located, and who had access to the computers. Yet, all parties appear to agree that, as of now, neither Plaintiff, Defendant, nor the Investor Entities own or have access to the computers at issue. [E.g., Docs. 92 at 1 (stating that “[a]ny emails sent or received by Plaintiff should be on the computers left at the 2207 North property that is under new ownership”); 93 at 2 (stating that Defendant “no longer manages 2207 North and lost access to the data server for that location”); 94 at 1 (stating that “[t]he computers owned by [the Investor Entities] and used by Plaintiff and Codrington are gone”).] And no party has addressed whether anyone has imaged or made a copy of Plaintiff's or Codrington's computers' hard drives or whether Plaintiff could now issue a subpoena to the new property owner to obtain the emails she seeks. Moreover, it is not clear to the Court whether Plaintiff asked Defendant to produce or preserve the documents she now seeks from the Investor Entities. It is only noted that Defendant believes it has produced all documents and data in its possession or that it received. Therefore, the Court does not have enough information to determine whether Plaintiff has suffered any harm or, if Plaintiff did suffer harm, whether the harm was due to any action or inaction by the Investor Entities in responding to the subpoenas.
CONCLUSION AND RECOMMENDATION
In light of the foregoing, the undersigned declines to certify facts to the district judge for contempt proceedings and recommends that Plaintiff's motion for contempt, for sanctions, and to compel [Doc. 57] be DENIED.
IT IS SO RECOMMENDED.