Opinion
Civ. No. 00-2559 D/A, Civ. No. 01-2033 D/A
August 21, 2003
Before the Court is the motion of Equity Title Company of Memphis and Steven Winkel ("Defendants") for reconsideration of the magistrate judge's March 28, 2003 order. Defendants maintain that the magistrate judge erred in ruling that they must produce the closing files of parties other than Plaintiff's, as requested by Plaintiff's pursuant to Interrogatory Number 8 and Numbers 13 and 21 of Plaintiff's' Requests for Production of Documents. Defendants assert that 1) the value of the discovery sought by Plaintiff's is substantially outweighed by the burden that such production would place on Defendants, 2) the requested production of the closing files is not reasonably incidental to Defendants' business, and 3) the production of the closing files would require Defendants to violate federal law and the privacy policies of title insurance company of which Equity Title is an agent. The Court has jurisdiction pursuant to 28 U.S.C. § 1331. For the following reasons, the Court denies Defendants' motion for reconsideration of the portion of the magistrate judge's order requiring Defendants to produce closing files from 1997 to the present.
I. PROCEDURAL BACKGROUND
On October 25, 2001, Plaintiff's sent discovery requests to Defendants. A stay was imposed in November 2001 preventing discovery until after June 2002. On August 6, 2002, Plaintiff's sent another copy of their discovery requests to Defendants. Defendants responded to the requests on October 15, 2002. Defendants objected to many of the requests, asserting that many of the requests were overly broad.
On December 9, 2002, Plaintiff's filed a motion to compel. Defendants responded on January 3, 2003. Thereafter, Defendants filed a motion for a protective order on February 10, 2003. Plaintiff's responded to the motion, claiming that the information and documents sought were relevant to their claims for fraud, conspiracy, housing discrimination, and criminal acts in furtherance of a RICO enterprise.
Plaintiff's' and Defendants' motions were referred by this Court to the magistrate judge. On March 28, 2003, the magistrate judge issued an order denying and granting in part Plaintiff's' motion to compel and denying and granting in part Defendants' motion for a protective order. With respect to Defendants' closing files, the magistrate judge limited Plaintiff's' inspection to those closing files produced by Equity Title from 1997 to present.
Defendants thereafter filed a motion for limitation of discovery, an amended motion for protective order, and a motion for reconsideration. All three motions pertained to the disclosure of Defendants' closing files. Plaintiff's filed a memorandum in opposition of Defendants' motions and a motion to strike and for sanctions. Thereafter, the Court issued an order of reference, referring the motions to the magistrate judge. Thus, the only motion pending before this Court is the motion for reconsideration of the magistrate judge's March 28, 2003 order.
II. STANDARD OF REVIEW
Title 28, Section 636(b)(1)(A) permits a judge to "designate a magistrate to hear and determine any pretrial matter pending before the court" except those matters that are dispositive. A district court may reconsider any pretrial matter ruled upon by a magistrate judge "where it has been shown that the magistrate's order is clearly erroneous or contrary to law." 28 U.S.C. § 636(b)(1)(A). When reviewing a magistrate judge's ruling made pursuant to 28 U.S.C. § 636(b)(1)(A), "the district court is not permitted to receive further evidence; it is bound by the clearly erroneous rule in reviewing questions of fact."Haines v. Liggett Group. Inc., 975 F.2d 81, 91 (3d Cir. 1992).
III. ANALYSIS
Plaintiff's' Interrogatory 8 requested Defendants to "[d]escribe each and every document, including the date and current custodian of each such document, concerning the loan transaction and/or closings by Equity Title." Defendants objected to the interrogatory as being overly broad and unduly burdensome. Plaintiff's asserted that they needed to examine Defendants' closing files to substantiate their claims of concerted activity by some or all of Defendants to defraud and exploit unsophisticated home-buyers.
The magistrate judge determined that the interrogatory was too broad because it would include loan transactions and/or closings by Equity Title from the inception of the company's business. The magistrate judge found, however, that Plaintiff's were entitled to review documents concerning loan transactions and/or closing files of individuals other than Plaintiff's. In making his decision, the magistrate judge considered Defendants' argument that producing the documents would be unduly burdensome because of the alleged cost associated with the production. This argument was considered by the magistrate judge despite the fact that Defendants failed to assert this objection timely, and instead submitted an affidavit to support their argument well after the applicable deadline. In so considering Defendants' argument, the magistrate judge noted that the costs of complying with discovery requests are the normal costs of doing business to be borne by the party producing the discovery. FTC v. Rockefeller, 591 F.2d 182, 191 (2d Cir. 1979). The court determined that this was especially true when the costliness of the discovery procedure involved is entirely the product of the defendant's record keeping system. Delozier v. First Nat'l Bank of Gatlinburg. 109 F.R.D. 161, 164 (E.D. Term. 1986).
The magistrate judge found that Defendants chose to have their records stored by another company, and as such, should not be able to assert that the cost to retrieve their files is too costly. The court did limit the documents that Defendants were required to produce to files dating from 1997 to the present. Furthermore, the court also placed the responsibility of reviewing the documents on Plaintiff's because Defendants argued that reviewing the documents would require the use of numerous employee hours and would result in substantial employee expenses. Having reviewed the magistrate judge's ruling and the applicable case law, the Court concludes that the magistrate judge's order was not clearly erroneous or contrary to law. The Court would also point out that the magistrate judge chose to consider Defendants' arguments/objections despite the fact that he could have ruled that Defendants had waived the right to object to the requested discovery by failing to respond to Plaintiff's' requests until two months after receiving Plaintiff's' requests. Accordingly, the Court denies Defendants' motion for reconsideration of the magistrate judge's March 28, 2003 order granting and denying in part Plaintiff's' motion to compel.
Defendants filed the affidavit of Cary Califf with their motion to reconsider the magistrate judge's order. The affidavit includes additional reasons, not considered by the magistrate judge, why Defendants should not be required to comply with the discovery request. The Court will not consider this affidavit, however, given that it was not submitted to the magistrate judge for his review, and thus, is new evidence. Defendants had the opportunity to submit the affidavit when they filed their motion for protective order and their response to Plaintiff's' motion to compel, but chose not to do so.
IV. CONCLUSION
For the reasons stated herein, the Court finds that the magistrate judge's order is not clearly erroneous or contrary to law. Accordingly, the Court denies Defendants' motion for reconsideration of the magistrate judge's March 28, 2003 order.
IT IS SO ORDERED