Opinion
Case No. 01-2149-JWL
August 29, 2002
MEMORANDUM AND ORDER
This matter is before the court on "Defendant Surpas Resource Corporation's Motion to Reconsider June 26, 2002 Order" ("the order") (Doc. 100), which granted plaintiff's motion for sanctions. Though defendants' motion is captioned as a motion to reconsider, the substance of the motion makes clear that defendants are requesting this court review the magistrate judge's order, pursuant to D. Kan. Rule 72.1.4. As such, the court treats defendants' motion as a motion to review the magistrate judge's June 25, 2002 order imposing sanctions.
In its motion defendant states that "United States Magistrate Judge Waxse dated his Order June 25, 2002, but the Order is file stamped June 26, 2002." It appears, however, that the magistrate judge dated his order June 24, 2002, and the file stamped date is June 25, 2002. Because D. Kan. Rule 6.2 provides that the file-stamped date controls, the court will refer to the magistrate judge's order as the June 25, 2002 order herein.
Defendants cite to and acknowledge that their motion is governed by 28 U.S.C. § 636(b)(1)(A), which provides that a district court judge may reconsider any pretrial matter decided by a magistrate judge where it has been shown that the magistrate's order is clearly erroneous or contrary to law. Defendants citation and acknowledgment confirms that they intend for this court to review the magistrate's order pursuant to D. Kan. Rule 72.1.4 as opposed to having the magistrate judge reconsider his own order pursuant to D. Kan. Rule 7.3. Moreover, defendants agreed, in their reply, that the court should review the magistrate judge's order for clear error or findings contrary to law.
In the June 25, 2002 order, the magistrate judge awarded plaintiff reasonable expenses incurred by her counsel in traveling from Washington, D.C. to Texas to depose defendants who failed to appear. Federal Rule of Civil Procedure 37(d) mandates such sanctions, so long as the defendants' conduct was not substantially justified and other circumstances would not make an award of expenses unjust. This court, therefore, affirms the magistrate judge's order because defendants failed to appear for a properly noticed deposition, and after reviewing all of the evidence, this court is not left with the definite and firm conviction that the magistrate judge committed a mistake by not finding substantial justification for defendants' failure to attend or not finding other circumstances making an award of expenses unjust.
While only Defendant Surpas Resource Corporation seeks review of the magistrate judge's order, the plaintiff's original motion sought sanctions against defendant Surpas Resource Corporation and defendant Ray Cash and the magistrate judge's order found both defendants Surpas and Cash had ultimate responsibility for ensuring that notices of deposition were quashed. Moreover, both defendants were represented by the same counsel at the time the relevant events transpired. In light of these facts and for the purpose of consistency and clarity, the court will refer to the moving party as "defendants" as opposed to "defendant Surpas".
Background
In the underlying action, plaintiff has alleged that defendants violated provisions of the Kansas Consumer Protection Act and Kansas state law in their debt collection efforts. On April 4, 2002, plaintiff served three notices of deposition on counsel for defendants. The first deposition was scheduled for April 15, 2002 in San Antonio, Texas. Two other depositions were scheduled for April 16 and 17, 2002 in Houston, Texas. On April 15, 2002, plaintiff's counsel arrived at the deposition site in San Antonio, Texas to depose defendants. Neither defendants nor their counsel appeared. At 5:28 p.m. on April 15, 2002, well after the scheduled time for the depositions, defendants filed a motion to quash the notices of deposition.
The parties dispute the legitimacy of defendants' failure to appear. Defendants allege that plaintiff agreed to reschedule the depositions so long as defendants would extend discovery beyond the April 19, 2002 deadline. Defendants further allege that they satisfied this "condition precedent" by agreeing to extend discovery in correspondence to plaintiff's counsel dated April 11, 2002. Plaintiff, on the other hand, alleges that she was agreeable to rescheduling the deposition only if a new deposition date had been established and the discovery deadline was extended. Plaintiff further alleges that she and defendants never formally reached an agreement to reschedule the noticed depositions.
The magistrate judge found that "the facts are unclear as to whether the properly noticed depositions had in fact been canceled" and, therefore, reasoned that "defendants had the obligation to file a motion for protective order or motion to quash the deposition notices in a timely fashion, thereby staying the depositions." Though the magistrate judge awarded sanctions, he reduced the requested amount of expenses and fees to $4,539 to reflect the reasonable costs incurred by plaintiff's counsel. Finally, the magistrate judge found that "defendant[s] . . . had the ultimate responsibility for ensuring that a timely motion for protective order or motion to quash the notices of deposition was filed to stay the properly noticed depositions," but imposed the sanctions against the law firm of Blackwell Sanders Peper Martin LLP instead of defendants.
Standard of Review
A district court reviewing a magistrate judge's order relating to a non-dispositive pretrial matter, such as plaintiff's motion for sanctions, must determine whether the magistrate judge's order is "clearly erroneous or contrary to law." Hutchinson v. Pfeil, 105 F.3d 562, 566 (10th Cir. 1997); 28 U.S.C. § 636(b)(1)(A); Fed.R.Civ.P. 72(a). The clearly erroneous standard requires that the district court affirm "unless it `on the entire evidence is left with the definite and firm conviction that a mistake has been committed.'" Ocelot Oil Corp. v. Sparrow Ind., 847 F.2d 1458, 1464 (10th Cir. 1988) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948)). In short, "[b]ecause a magistrate is afforded broad discretion in the resolution of nondispositive discovery disputes, the court will generally grant the magistrate great deference". Smith v. MCI Telecomm. Corp., 137 F.R.D. 25, 27 (D.Kan. 1991) (citing Sil-Flo, Inc. v. SFHC, Inc., 917 F.2d 1507, 1514 (10th Cir. 1990)).
Discussion
Rule 37(d) of the Federal Rules of Civil Procedure provides, in pertinent part, that if a party "fails (1) to appear before the officer who is to take the deposition, after being served with proper notice . . ., the court in which the action is pending on motion may make such orders in regard to the failure as are just." Fed.R.Civ.P. 37(d); ORI, Inc. v. Lanewala, 2000 WL 33676145, at *3 (D.Kan. Dec. 27, 2000). The federal rule further contemplates that "[i]n lieu of any order or in addition thereto, the court shall require the party failing to act or the attorney advising that party or both to pay the reasonable expenses, including attorney's fees, caused by the failure unless the court finds that the failure was substantially justified or that other circumstances make an award of expenses unjust." Fed.R.Civ.P. 37(d) (emphasis added). In determining the appropriate sanction to be imposed, the court must consider the purposes to be served by the imposition of sanctions. Resolution Trust Corp. v. Williams, 162 F.R.D. 654, 660 (D.Kan. 1995). In White v. Gen. Motors Corp., 908 F.2d 675, 683 (10th Cir. 1990), the Tenth Circuit Court of Appeals explained that such purposes include: (1) deterring future litigation abuse, (2) punishing present litigation abuse, (3) compensating victims of litigation abuse, and (4) streamlining court dockets and facilitating case management.
In the motion for review, defendants argue that the magistrate judge committed clear error in awarding sanctions because: (1) counsel did not engage in any misconduct, (2) counsel was substantially justified in not attending the unilaterally noticed depositions, and (3) other circumstances make any award of sanctions inappropriate. The court finds these arguments are insufficient to overcome the deferential standard of review afforded the June 25, 2002 order.
Misconduct of Counsel
Defendants argue that the order is clearly erroneous because the magistrate judge failed to address the presence or absence of "misconduct" and that precedent from the District of Kansas confirms that sanctions are not warranted. The court finds defendants' arguments unpersuasive.
Defendants' Culpability or Misconduct
While the degree of defendants' culpability is a factor to consider in determining the severity of discovery sanctions to be applied, "misconduct" is not a precondition to imposing sanctions under Rule 37(d). Lee v. Walters, 172 F.R.D. 421, 425 (D.Or. 1997) (citing Halaco Eng. Co. v. Costle, 843 F.2d 376, 380 (9th Cir. 1988)). The plain language of Rule 37(d) provides that a court may make such an order after a party fails "to appear before the officer who is to take the deposition, after being served with a proper notice." Fed.R.Civ.P. 37(d). The advisory committee notes explain that "in view of the possibility of light sanctions, even a negligent failure should come within Rule 37(d)." Fed.R.Civ.P. 37(d) advisory committee notes (1970). Therefore, "[s]anctions are appropriate once a failure to comply with a discovery request has been established; the degree of culpability is merely a factor for the court to consider in determining the severity of the sanction to be applied." E.E.O.C. v. Sears, Roebuck and Co., 114 F.R.D. 615, 626-627 (N.D.Ill. 1987).
Defendants do not dispute the magistrate judge's findings that plaintiff served proper notices of deposition upon counsel and that "[n]either defendant Cash nor his counsel appeared for the deposition." Moreover, these unchallenged findings are clearly supported by evidence contained in the record. Defendants' simple failure to comply with these notices is sufficient to invoke the magistrate judge's authority to impose sanctions, absent substantial justification or other circumstances rendering sanctions unjust. As such, the magistrate judge's failure to find "misconduct" is neither clearly erroneous nor contrary to law.
Precedent from District of Kansas
Defendants further contend that precedent from the District of Kansas confirms that sanctions are not warranted. In support of this claim, defendants rely primarily on two cases, both of which are easily distinguished from the present action. First, defendants cite VNA Plus, Inc. v. Apria Healthcare Group, Inc., No. Civ.A. 98-2138-KHV, 1999 WL 386949 (D.Kan. June 8, 1999), for the proposition that where parties agree to postpone depositions, sanctions are inappropriate. In VNA Plus, Inc., plaintiff served notice of depositions scheduled for March 29, 1999. Id. at *10. The parties, however, agreed to postpone the depositions prior to the scheduled date. Id. Plaintiff alleged that it agreed to postpone the depositions on the condition that defendants produce a representative to be deposed before April 30, 1999. Id. When that condition failed to materialize, plaintiff moved for sanctions. The court denied sanctions because the parties had agreed to postpone the original depositions and defendants did not receive proper notice of any other date for the rescheduled deposition. Id.
In this action, unlike VNA Plus, Inc., the magistrate judge did not find that plaintiff Dorothy M. Lowe and defendants reached an agreement to postpone or reschedule the properly noticed depositions. Instead, the magistrate judge found that "the facts are unclear as to whether the properly noticed depositions had in fact been cancelled." The magistrate judge reasoned that in light of this ambiguity, "defendants had the obligation to file a motion for protective order or motion to quash the depositions notices in a timely fashion." While defendants continue to dispute the validity of the magistrate judge's finding, as discussed fully in the following section, these findings are neither clearly erroneous nor contrary to law.
Defendants also rely on Williams v. Bd. of County Comm'r of the Unified Gov't of Wyandotte County and Kansas City, Kansas, 192 F.R.D. 698 (D.Kan. 2000) for the proposition that a deposition is no longer "scheduled" within the meaning of Rule 37(d) once the deposing party requests dates to reschedule. In Williams, defendants served plaintiff's counsel with an amended notice of deposition scheduled for December 13, 1999. 192 F.R.D at 705. Within four days after serving notice, defendants filed a motion to compel plaintiff's attendance and requested sanctions, anticipating that plaintiff would not appear. Id. at 706. On December 8, 1999, plaintiff's counsel notified defendants of a conflict on the scheduled date. Id. Defendants' counsel then requested that plaintiff forward dates and times to reschedule the December 13, 1999 deposition. Id. The court refused to award sanctions when plaintiff failed to appear on December 13, 1999 because (1) apparently the magistrate judge believed the parties reached an implicit agreement to reschedule the deposition by virtue of defendants' unconditional request for alternative deposition dates, and (2) defendants' failed to allege in sufficient detail plaintiff's failure to report to a scheduled deposition. Id.
Defendants, in their motion, inadvertently cited to Williams v. Bd. of County Comm'r of the Unified Gov't of Wyandotte County and Kansas City, Kansas, 2000 WL 1375267, No. 98-2485-JTM (D.Kan. Aug. 30, 2000). In their reply, defendants explained that they intended to cite and attach the May 19, 2000 order in that matter. On August 14, 2002, plaintiff requested leave to file a surreply to address the correctly cited decision and attached a copy of the surreply to the motion. Leave to file a surreply is typically reserved for "rare circumstances". Jackson v. U.S. Postal Serv., 162 F. Supp.2d 1246, 1249 n. 2 (D.Kan. 2001). This court, however, finds that permitting plaintiff the opportunity to directly respond to and distinguish the case that defendants correctly cited and attached only in their reply is in the interests of justice and constitutes one of those "rare circumstances" justifying leave to file a surreply. As such, this court grants plaintiff leave and considered her surreply for the limited purpose of addressing the May 19, 2000 decision in Williams. The Court did not consider plaintiff's surreply arguments that did not directly relate to an analysis of the Williams decision.
Defendants interpret Williams as creating a general rule that a deposing party's willingness to discuss alternative deposition dates, alone, removes the noticed deposition from Rule 37(d). This court, however, reads the denial of sanctions in Williams as being predicated on an implicit agreement to reschedule the depositions and defendants' failure to allege with sufficient detail the plaintiff's failure to report. These factors are not present in this matter. In Williams, it appears that the magistrate judge believed that defendants' letter soliciting alternative deposition dates, which contained no additional terms or conditions on rescheduling, created an implicit agreement to cancel the noticed depositions. Here, however, plaintiff's request for alternative deposition dates was conditioned on an extension of the discovery deadline. Apparently, the magistrate judge was unable to conclude that this conditional request for alternative dates was sufficiently analogous to Williams to find an implicit agreement to cancel the noticed depositions. Additionally, unlike Williams, defendants have not claimed nor did the magistrate judge find that plaintiff Lowe failed to allege with sufficient detail facts supporting defendants' failure to report to the April 15, 2002 deposition.
While defendants contend that they assented to this condition in their April 11, 2002 correspondence, as discussed in Section II, the magistrate judge did not commit clear error in not finding that the parties agreed to postpone the scheduled depositions.
Substantial Justification
Though defendants failed to appear for a properly scheduled deposition, the court should not impose sanctions if that failure was substantially justified. Fed.R.Civ.P. 37(d). Defendants contend that they were substantially justified in not appearing because the parties had agreed to cancel the noticed depositions. In support of this argument, defendants explain that plaintiff agreed, in correspondence to defendants, that she would cancel the noticed depositions and reschedule them at a later date if defendants would agree to extend discovery beyond the April 19, 2002 deadline. Defendants characterize plaintiff's request as the sole "condition precedent" to an agreement to cancel the depositions. Defendants then contend that when they agreed to extend discovery until May 31, 2002, (in correspondence dated April 11, 2002), a formal agreement to cancel the noticed depositions had been reached.
The magistrate judge found, however, that "the facts are unclear as to whether the properly noticed depositions had in fact been cancelled." The magistrate judge's finding is not clearly erroneous. First, the evidence demonstrates ambiguity as to whether plaintiff imposed one or two conditions precedent to cancelling the noticed depositions. Plaintiff's counsel alleges that in the April 9 and 10, 2002 correspondence, he requested both mutually convenient rescheduled deposition dates and an enlargement of time for discovery as preconditions to cancelling the noticed depositions. While defendants contend that those letters established a single condition precedent to rescheduling the depositions, namely an extension of the discovery deadline, plaintiff's correspondence creates enough ambiguity that this court is not left with the definite and firm conviction that the magistrate judge was mistaken in finding uncertainty as to whether the depositions had been cancelled.
Second, even if plaintiff's only condition precedent to cancelling the noticed depositions was an extension of the discovery deadline, the evidence demonstrates ambiguity as to whether defendants satisfied that condition. Defendants assert that their counsel agreed to the requested discovery extension and advised plaintiff of such agreement by letter of April 11, 2002. This letter, however, is characterized as an "offer" to extend discovery until May 31, 2002. Moreover, this "offer" was expressly conditioned upon the parties rescheduling the deadline for submitting the proposed pretrial order and dispositive motions. Because defendants' alleged "acceptance" of plaintiff's offer to cancel the scheduled depositions appears to be at best a counter-offer, Restatement (Second) of Contracts § 59 (1979) ("A reply to an offer which purports to accept it but is conditional on the offeror's assent to terms additional to or different from those offered is not an acceptance but is a counter-offer."), this court is not left with the definite and firm conviction that the magistrate judge was mistaken in finding uncertainty as to whether the depositions had been cancelled.
Once the magistrate judge found that it was unclear whether the parties agreed to cancel the scheduled depositions, he reasoned that "defendants had the obligation to file a motion for protective order or motion to quash the deposition notices in a timely fashion, thereby staying the depositions under D. Kan. Rule 26.2." The magistrate judge's holding is well reasoned and supported by the law. Lee v. Walters, 172 F.R.D. 421, 429 (D.Or. 1997) (holding that no substantial justification existed for attorney's failure to attend depositions, even though opposing counsel should have known attorney would not attend, absent protective order or a clear and unambiguous agreement by opposing counsel to postpone depositions); Telluride Mgmt. Solutions, Inc. v. Telluride Inv. Group, 55 F.3d 463, 467 (9th Cir. 1995) (affirming sanctions against defense counsel for failing to appear at a deposition absent a valid protective order, even though he had informed plaintiff that he did not plan to attend), rev'd on other grounds, Cunningham v. Hamilton County, 119 S.Ct. 1915 (1999).
III. "Other Circumstances" Making Sanctions Unjust
Defendants contend that "other circumstances" make the imposition of sanctions unjust. Specifically, defendants explain that counsel, subsequent to their failure to appear, agreed to permit plaintiff to depose the witnesses at defendants' expense in Kansas City. As such, defendants argue that plaintiff was not required to travel again to Texas for the depositions and was allowed to proceed at defendants' expense.
Defendants' argument does not establish clear error. First, after reviewing the record, it does not appear that defendants raised this issue before the magistrate judge. Review of a magistrate judge's ruling before the district court does not permit consideration of issues not raised before the magistrate judge. Jesselson v. Outlet Assoc. of Williamsburg, Ltd. P'ship, 784 F. Supp. 1223, 1228 (E.D.Va. 1991). Second, even if defendants had raised the "other circumstances" argument, their ultimate submission to plaintiff's request for depositions does not make sanctions unjust. The fact that defendants ultimately allowed plaintiff to depose defendants does not purge their failure to appear on April 15, 2002. Henry v. Gill Ind., Inc., 983 F.2d 943, 947 (9th Cir. 1993) (rejecting plaintiffs' argument that failure to appear was rectified by subsequent submission to deposition). While defendants agreed to have the witnesses deposed in Kansas City at their own expense, this gesture does not entirely offset the cost and inconvenience plaintiff incurred in traveling to Texas for the properly noticed depositions. Finally, it is worth reminding defendants that the magistrate judge did not order the full amount of sanctions requested by plaintiff. In her original motion for sanctions, plaintiff requested over $30,000 in fees and costs. The magistrate judge's order reduced plaintiff's request to an award of $4,539. This fact further undercuts defendants' argument that "other circumstances" make this award unjust.
Other Issues Raised by Defendants
Defendants also contend that sound public policy makes the imposition of sanctions inappropriate in this case. Defendants argue that by requiring counsel to file motions to quash and/or for protective orders whenever opposing counsel notices a deposition or subpoenas a witness on a date when counsel is unavailable, the magistrate judge's order undermines federal policy requiring parties to attempt to resolve discovery disputes in good faith prior to seeking relief from the court. Such a position, defendants argue, raises the possibility of burdensome and unnecessary discovery motions.
Defendants exaggerate the burden created by the magistrate judge's order. The order does not require counsel to seek protection from the court whenever opposing counsel notices a deposition on a date when counsel is unavailable. Instead, the magistrate judge's order merely contemplates that when the parties fail to reach a conclusive agreement to cancel and reschedule noticed depositions, the burden is on the counsel seeking an alternative date to pursue relief from the court. The magistrate judge's order leaves ample room for parties to negotiate a resolution to discovery disputes, as contemplated in the federal rules. However, when good-faith negotiation fails to yield a definitive agreement, which often may be the case, the magistrate judge's order simply articulates which party has the burden to file with the court. As such, the magistrate judge's order is wholly compatible with established public policy.
Defendants also argue that the $4,539 award of sanctions, which the magistrate judge found represented the reasonable costs incurred by plaintiff's counsel in traveling to Texas, is erroneous because the sanction merely compensates the plaintiff, as opposed to deterring future violations. In support of their argument, defendants rely on Olyer v. United States, No. 92-2104-JWL, 1993 WL 144543 (D.Kan. April 15, 1993). Defendants' argument fails to establish reversible error. First, Oyler is distinguishable from the present case because the court found that a monetary sanction was not necessary in view of the circumstances that caused plaintiff to miss the noticed depositions. In this action, however, the magistrate judge did not find that defendants' counsel was substantially justified in failing to appear. Second, while the primary purpose of sanctions may be to deter future violations, punishing the specific offense and compensating victims of the abuse are also legitimate purposes served by Rule 37 sanctions. Resolution Trust Corp. v. Williams, 162 F.R.D. 654, 660 (D.Kan. 1995); Wouters v. Martin Co., Fla., 9 F.3d 924, 933 (11th Cir. 1993) ("Sanctions allowed under Rule 37 are intended to 1) compensate the court and other parties for the added expense caused by discovery abuses, 2) compel discovery, 3) deter others from engaging in similar conduct, and 4) penalize the offending party or attorney.") In fact, Rule 37(d) mandated the magistrate judge impose reasonable costs. The rule provides that "in lieu of any order or in addition thereto, the court shall require the party failing to act or the attorney advising that party or both to pay the reasonable expenses, including attorney's fees, caused by the failure unless the court finds that the failure was substantially justified or that other circumstances make an award of expenses unjust." Fed.R.Civ.P. 37(d) (emphasis added). Once the magistrate judge did not find that defendants were substantially justified in failing to appear and did not find that other circumstances would make sanctions unjust, federal rule compelled the magistrate judge to award reasonable expenses. As such, the magistrate judge's award of reasonable costs is not clearly erroneous or contrary to law.
Because the court, upon review of the record before the magistrate judge, is not left with the definite and firm conviction that a mistake has been committed, it hereby affirms the June 25, 2002 order of the magistrate judge.
IT IS THEREFORE ORDERED BY THE COURT THAT defendants' motion for review of Magistrate Judge's Order (Doc. 100) is denied.
IT IS SO ORDERED