Opinion
Demian Camacho, U.S. Dept. of Labor, Los Angeles, CA, Joseph Michael Lake, Marc Anthony Pilotin, Susan Seletsky, Kimberly Anne Robinson, U.S. Dept. of Labor Office of the Solicitor, San Francisco, CA, for Plaintiff.
Jennifer Rachel Yee, Joshua Robert Woodard, Snell & Wilmer LLP, Phoenix, AZ, for Defendants.
ORDER
Honorable Roslyn O. Silver, Senior United States District Judge
Before the Court is Plaintiff’s Motion to Enforce Discovery Order. (Doc. 62). A brief recitation of the Parties’ prior discovery dispute and the Court’s prior order is necessary. On August 30, 2017, the Parties filed a Joint Statement Regarding the Parties’ Discovery Dispute. (Doc. 40). Plaintiff explained it " requested financial records, such as Defendants’ complete, unredacted general ledger reports and supporting documents for labor categories," and explained its request was necessary in part because " [a]ll expense categories need to be examined to determine whether they contain misplaced or mischaracterized labor costs." (Id. ). In response, Defendant explained their " general ledger" is a " proprietary accounting software system" containing both labor-related and non-labor-related data, and asserted Plaintiff’s request for the entirety of Defendants’ financials was unrelated to Plaintiff’s claims and disproportionate to the case’s needs. (Id. ). The Court granted Plaintiff’s request and ordered Defendants produce an " unredacted general ledger." (Doc. 43).
Plaintiff now argues Defendants have failed to produce an " unredacted general ledger report," as ordered by the Court, instead producing only income statements and transaction lists whose data is drawn from the general ledger. (Doc. 62). Plaintiff asks the Court sanction Defendants. (Id. ).
In response, Defendants argue they have fully complied by producing " (1) unredacted general ledger reports [i.e. Austin Electric’s monthly income statements]; and (2) supporting documents for labor categories," and argue Plaintiff is attempting to obtain irrelevant, " supporting documents for non-labor categories." (Doc. 65). Defendants argue Plaintiff’s request for a general ledger stems from a misunderstanding of Defendants’ software and that Defendants have " no single general ledger." (Id. ). Defendants also argue Plaintiff failed to meet and confer in good faith prior to filing its Motion because Plaintiff only sent a single letter notifying Defendants of their deficient production and did not respond to Defendants’ request to discuss the matter. (Id. ). Defendants request an award of reasonable expenses, including attorney’s fees. (Id. ).
In reply, Plaintiff argues Defendants are feigning confusion regarding the requested general ledger and that Defendants’ statement that there is " no single general ledger" is inaccurate. (Doc. 68). Plaintiff argues Defendants previously objected to Plaintiff’s request for a general ledger not because it did not exist, but because " [e]ach job in which Austin Electric provides services may contain up to 15 pages of data on the general ledger[ and, a]t approximately 3,500 homes serviced per year, it is an overwhelmingly burdensome task to include all transactions during the Subject Period." (Id. ). Plaintiff also argues Defendant previously drew a distinction between its " general ledgers" and " income statements," demonstrating they are not interchangeable, and that the income statements cannot assist Plaintiff in determining whether Defendants mischaracterized labor costs as expenses. (Id. ). Finally, contrary to Defendants’ assertion, Plaintiff states it did respond to Defendants’ request to meet and confer, and that Defendants then failed to respond to Plaintiff. (Id. ).
The Court’s prior order is plain and clear: Defendants were to produce their general ledger and supporting documents for labor categories. Defendants’ supposed ignorance regarding what constitutes a " general ledger" is unconvincing because Defendants previously referred to certain records as their " general ledger," and have, apparently, produced voluminous summaries derived from it. (See, e.g., Defendants’ Response to Secretary’s Request for Production (" Defendants produced to the DOL Austin Electric’s general ledger summaries for 1/1/2015 to 3/15/2015; the detail pages for these general ledger summaries for that 10-week time period alone are 4,000 pages." ) ).
Despite Defendants’ alleged confusion regarding the definition of a " general ledger," there is no question of what is requested. " The general ledger is nothing more than a summary of your business activities. Every asset, liability, net worth, income, cost, and expense account is listed here." MICHAEL C. THOMSETT, BUILDER’S GUIDE TO ACCOUNTING 278 (2001); see also ULRIC J. GELINAS ET AL., ACCOUNTING INFORMATION SYSTEMS 589 (6th ed. 2005) (explaining general ledgers represent an accumulation of data from different company accounts); KATE MOONEY, THE ES SENTIAL DICTIONARY OF ACCOUNTING 179 (2004) (explaining general ledgers are " [a]n accounting device for collecting all the increases and decreases to each account in the chart of accounts" ). And, though most cases discuss " general ledgers" without defining them, those cases detailing the term have not characterized it as an " income statement," but recognized it contains significant information from various sources. See United States v. Catabran, 836 F.2d 453, 456 (9th Cir. 1988) (noting a general ledger contained " inventory, payroll, and other accounting data" ); Boeing Co. v. KB Yuzhnoye, No. CV 1300730ABAJWX, 2016 WL 2851297, at *15 (C.D. Cal. May 13, 2016) (noting a company’s " general ledgers and financial receipt records" showed " all payments that are made in and out of the company, all income and expense accruals, and all assets and liabilities and related transactions" ). The Court understands Defendants’ general ledger may be extensive, but this is not grounds for refusing to produce it. Reinsdorf v. Skechers U.S.A., Inc., 296 F.R.D. 604, 621 (C.D. Cal. 2013) (recognizing " Skechers’ general ledger contained 4,944,684 rows of data for the years 2007 through 2010 and up to thirteen fields of data" ).
Defendants have also recharacterized the Court’s order instructing Defendants to produce an " unredacted general ledger" as requiring Defendants to simply produce Defendants’ " income statements." Again, this plainly mischaracterizes the Court’s prior order and the commonly-understood definition of a " general letter," and fails to satisfy Plaintiff’s reason for requesting the general ledger, which was to determine if Defendants mischaracterized labor costs as other expenses . Moreover, Defendants previously drew a distinction between its " general ledger" and " income statements," which makes clear Defendants know the difference between the two. (See, e.g., Defendants’ Response to Secretary’s Request for Production). The Court’s prior order instructing Defendants to produce their general ledger of accounts, including all categories of expenses, is reaffirmed.
It is clear Defendants’ interpretation of the Court’s prior order and definition of a " general ledger" are indefensible. It is equally clear from Plaintiff’s email correspondence that Defendants’ counsel did not even review their own email correspondence before accusing Plaintiff of failing to reply to Defendants’ meet and confer request. The Court cautions Defendants’ counsel that the Court shall impose sanctions should Defendants’ counsel make any further filings containing readily-verifiable and clearly incorrect assertions. Defendants shall comply with this Order and the Court’s prior orders no later than November 20, 2017, or the Court will impose sanctions pursuant to Federal Rule of Evidence 37(b), including but not limited to awarding attorney’s fees or rendering a default judgment.
It is also clear Defendants’ 30(b)(6) witness was inadequately prepared for his deposition because papers were not made available.
The Court must also consider Plaintiff’s failure to meet and confer with Defendant prior to filing a Motion to Compel and the propriety of imposing sanctions. " [A] party may move for an order compelling disclosure or discovery. The motion must include a certification that the movant has in good faith conferred or attempted to confer with the person or party failing to make disclosure or discovery in an effort to obtain it without court action." Fed.R.Civ.P. 37(a)(1). Without such a certification, or absent a meaningful discussion regarding the parties’ dispute, courts will not grant a motion to compel. See e.g., Benyamini v. O’Brian, No. 211CV2317TLNACP, 2017 WL 3896349, at *3 (E.D. Cal. Sept. 6, 2017) (concluding a single letter advising of a party’s failure to comply with discovery was not a good faith effort to meet and confer); Cardoza v. Bloomin’ Brands, Inc., 141 F.Supp.3d 1137, 1145 (D. Nev. 2015) (denying motion to compel after concluding a meet and confer devoid of meaningful discussion of the issue was insufficient to satisfy the moving party’s requirement); Cavanaugh v. S. California Permanente Med. Grp., Inc., 583 F.Supp.2d 1109, 1139 (C.D. Cal. 2008) (holding that, due to the moving party’s failure to include a certification, the court could not consider the moving party’s discovery motion). Plaintiff did not provide such a certification. Instead, following Plaintiff’s notice of deficiency, the sole attempt to meet and confer on the issue appears to have been initiated by Defendants’ counsel, and abandoned by Plaintiff when Defendants’ counsel failed to follow up on their own request. Thus, Plaintiff’s motion to compel discovery and request for sanctions was wrongly filed and sanctions will be denied. At the Interim Status Conference, Plaintiff should be prepared to explain why Defendants should not be entitled to reasonable expenses and fees incurred in responding to Plaintiff’s motion, as provided by Federal Rule of Civil Procedure 37(a)(5)(B).
Accordingly,
IT IS ORDERED Plaintiff’s Motion to Enforce Discovery Order, (Doc. 62), is DENIED.
IT IS FURTHER ORDERED Defendants are to comply with this Order and the Court’s prior discovery orders no later than November 20, 2017.