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Class Produce Group, LLC v. Harleysville Worcester Insurance Co.

United States District Court, D. Maryland

November 9, 2018

Class Produce Group, LLC
v.
Harleysville Worcester Insurance Company,

         Dear Counsel:

         This case has been referred to me, by consent of the parties, for all proceedings and the entry of judgment, in accordance with 28 U.S.C. § 636(c). [ECF 60]. Plaintiff Class Produce Group, LLC (“CPG”) filed this lawsuit against Defendant Harleysville Worcester Insurance Company (“Harleysville”), alleging that Harleysville failed to indemnify CPG pursuant to an insurance contract, and failed to pay CPG's insurance claim. [ECF 38]. Presently pending is Harleysville's Motion for Sanctions or, in the Alternative, Motion to Compel CPG's Answers to Interrogatories and Request for Production of Documents. [ECF 74]. CPG opposed the Motion (“Opp.”), and Harleysville filed a Reply (“Reply”). [ECF 86, 91]. Because CPG had produced discovery during the briefing of the original motion, following a Court Order [ECF 94], CPG filed another Response (“CPG's Response”), and Harleysville filed another Reply (“Harleysville's Second Reply”). [ECF 95, 98]. I find that no hearing is necessary. See Loc. R. 105.6 (D. Md. 2016). For the following reasons, Harleysville's motion is GRANTED in part and DENIED in part.

         I. Background

         Judge Hollander entered a scheduling order in this case on May 16, 2018, setting a deadline of September 14, 2018, for Harleysville to make disclosures in compliance with Federal Rule of Civil Procedure 26(a)(2). [ECF 62]. On July 2, 2018, Harleysville served CPG with Interrogatories and Requests for Production of Documents. [ECF 74-1]. On August 3, 2018, counsel for CPG requested an additional two weeks to respond to Harleysville's requests. [ECF 74-2]. Harleysville's counsel responded that he was willing to discuss the requested extension, but because CPG had pushed for an expedited schedule, Harleysville wanted to discuss moving other deadlines. Id. The parties did not discuss further extensions. Two weeks later, on August 16, 2018, Harleysville inquired about the status of CPG's Answers and Responses. Id. Counsel for CPG responded that the discovery responses would be submitted by the following week, August 20-24, 2018. Id. On August 24, 2018, CPG produced documents to Harleysville, and indicated that the remaining discovery responses would be submitted by the following week, August 27-31, 2018. Id. The 7, 000 documents eventually produced by CPG were not segregated, were missing several attachments, and required several days for Harleysville to download in readable form. [ECF 74 ¶ 8]. Without further response from or discussion with CPG, Harleysville filed the instant motion on September 6, 2018. [ECF 74]. On September 7, 2018, CPG served its Answers and Responses to Harleysville's Interrogatories and Requests for Production of Documents. [ECF 86-3]. On September 10, 2018, I held a telephonic conference to discuss the scheduling issues raised by Harleysville. As a result of that conference, I entered a revised scheduling order, setting a new deadline of November 14, 2018, for Harleysville to make its Rule 26(a)(2) disclosures. [ECF 79].

         On October 4, 2018, Harleysville filed a Reply in support of the instant motion, raising several issues regarding the sufficiency of CPG's discovery responses, to which CPG had not yet had the opportunity to respond. [ECF 91]. As a result, on October 10, 2018, I directed CPG and Harleysville to meet and confer in an attempt to resolve the discovery dispute, pursuant to Local Rule 104.7. [ECF 94]. In the event that a meet and confer did not resolve the dispute, I directed the parties to brief their respective positions on the sufficiency of CPG's discovery responses.

         Efforts to resolve the discovery dispute began before my October 10, 2018 Order. Harleysville contacted CPG regarding its deficient discovery responses on October 4, 2018, and CPG responded on October 5, 2018, providing several explanations for its discovery responses. [ECF 98-1]. As a result of my October 10, 2018 Order, CPG compiled a privilege log, supplemented its document production, including email communication, and provided supplementary interrogatory answers. See [ECF 95 at 4, 98-3, 98-5, 98-6]. The parties held a telephonic conference on October 12, 2018, to address the sufficiency of the updated discovery responses. [ECF 98-2]. On October 16, 2018, counsel for Harleysville sent a letter to CPG's counsel, memorializing the conference call between the parties. [ECF 98-2]. As a result of the parties' telephonic conference, Harleysville agreed to limit the scope of Interrogatories Nos. 7 and 8, and Requests for Production of Documents Nos. 18 and 20 to the “‘Warehouse Sewer System' as claimed defined in the Interrogatories/Requests.” Id. at 2. CPG also agreed to send copies of the produced documents that were inaccessible or password protected. Id. According to Harleysville, however, CPG “refused to segregate out responsive documents that would be produced at the company's facility” because the amount of documents would “fill a large U-Haul Truck.” Id. at 2-3; [ECF 98-1 at 1]. Harleysville also objected to CPG's untimely privilege log, arguing that it was not sufficient under Federal Rule of Civil Procedure 26(b)(5), and that it did not provide the information required by Discovery Guideline 10(d). Id. at 4. Harleysville raised concerns over CPG's lack of produced emails and CPG's 16, 000 documents already produced, which Harleysville contends “were not produced in any indexed fashion that relate to particular responses.” Id. at 5.

         The parties were unable to resolve the discovery dispute, and they briefed their respective positions on the sufficiency of CPG's discovery responses. [ECF 95, 98]. CPG supplemented its privilege log before Harleysville filed its Reply, adding a list of specific dates for the email communications it deemed subject to its claims of privilege. [ECF 98-4].

         II. Discussion

         Harleysville now seeks sanctions against CPG in the form of a default judgment or an order deeming CPG's late responses and/or objections to be waived. In the alternative, Harleysville seeks an order compelling CPG to fully respond to the outstanding discovery requests, and requiring CPG to pay the attorneys' fees and expenses Harleysville incurred in preparing this Motion.

         A. Motion for Sanctions

         Under Federal Rule of Civil Procedure 37(d)(1)(A)(ii), the Court may grant a motion for sanctions if a party fails to serve answers, objections, or a written response to properly served discovery requests. The motion must certify that “the movant has in good faith conferred or attempted to confer with the party failing to act in an effort to obtain the answer or response without court action.” Fed.R.Civ.P. 37(d)(1)(B). When granting the motion, the Court has broad discretion to select any of the sanctions listed in Federal Rule 37(b)(2)(A), such as dismissal of the action or the rendering of a default judgment against the delinquent party. Instead of, or in addition to, these sanctions, the Court “must require the party failing to act, the attorney advising that party, or both to pay reasonable expenses, including attorney's fees, caused by the failure, unless the failure was substantially justified or other circumstances make an award of expenses unjust.” Fed.R.Civ.P. 37(d)(3).

         When determining which of the Rule 37 sanctions is appropriate, courts in the Fourth Circuit consider four factors: “(1) whether the non-complying party acted in bad faith, (2) the amount of prejudice that noncompliance caused the adversary, (3) the need for deterrence of the particular sort of non-compliance, and (4) whether less drastic sanctions would have been effective.” S. States Rack and Fixture, Inc. v. Sherwin-Williams, Co., 318 F.3d 592, 597 (4th Cir. 2003) (internal quotation marks omitted). The presence or absence of any one of these factors is not dispositive. See Victor Stanley, Inc. v. Creative Pipe, Inc., 269 F.R.D. 497, 533 (D. Md. 2010). “[A]s a general matter, defaults [should] be avoided and [] claims and defenses [should] be disposed of on their merits.” Colleton Preparatory Acad., Inc. v. Hoover Universal, Inc., 616 F.3d 413, 417 (4th Cir. 2010) (citing Tazco, Inc. v. Director, Office of Workers Comp. Program, U.S. Dep't of Labor, 895 F.2d 949, 950 (4th Cir. 1990) (“The law disfavors default judgments as a general matter.”)); Consol. Masonry & Fireproofing, 383 F.2d 249, 251 (4th Cir. 1967) (“Generally a default should be set aside where the moving party acts with reasonable promptness and alleges a meritorious defense.”).

         I do not find the sanctions sought by Harleysville to be appropriate at this stage, in part because this is the first discovery dispute raised in this case, and because CPG served its Answers and Responses one day after the motion was filed. After application of the factors, I find that the email correspondence between the parties does not reflect bad faith on CPG's part, nor has Harleysville been prejudiced by CPG's delay. CPG's counsel submitted the requested documents on August 24, 2018, within the time period CPG communicated to Harleysville's counsel. [ECF 74-2]. Although CPG submitted the remaining discovery Responses and Answers two weeks later, on September 7, 2018, CPG's counsel noted on August 24, 2018, that the responses would be forthcoming. Id. Moreover, Harleysville's scheduling concerns were addressed during the telephonic conference on September 10, 2018, after which I amended the scheduling order to allow ample time for both parties to meet their respective pretrial deadlines. Thus, I do not find that Harleysville suffered any prejudice in this delay. Accordingly, the drastic sanctions sought by Harleysville are not appropriate. However, the parties are reminded that a scheduling order “is not a frivolous piece of paper, idly entered, which can be cavalierly disregarded by counsel without peril.” See Gestetner Corp. v. Case Equip. Co., 108 F.R.D. 138, 141 (D. Me. 1985). Further failures to comply will be viewed in accordance with this warning.

         B. ...


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