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By: Janet R. Barringer, Esq. and Andrew M. Vandini
On September 8, 2022, Judge Mark T. Wolf, longtime federal judge from Massachusetts’ District Court, entered a default judgment in favor of Plaintiffs in Red Wolf Energy Trading, LLC v. Bia Capital Mgmt., LLC after Defendants repeatedly failed to comply with discovery orders related to electronically stored information (“ESI”). Although default judgment is a drastic sanction to be used in only extreme circumstances, the Court determined Defendants were at best reckless and at worst deliberately deceitful in their deficient productions. Indeed, Plaintiff’s inability to timely obtain relevant documents from Defendants both prejudiced Plaintiff and injured the Court’s ability to manage the case and its docket. Moreover, Defendants failed to comply with not one but two Court orders, filing affidavits each time swearing to the veracity of their production.
In 2019, the Court ordered Defendants to produce documents related to Plaintiff’s claim that Defendant misappropriated trade secrets. In April 2021, Plaintiff alleged Defendants had not produced all required documents, prompting the Court to instruct Defendants to supplement their production. Subsequently, counsel for Defendants filed an affidavit claiming all five (5) Defendants had complied with the order. Unsatisfied, the Court again ordered Defendants to supplement their production in August 2021. And, once again, counsel for Defendants filed an affidavit ensuring Defendants’ compliance with the Court order.
However, sometime thereafter Defendants produced forty-seven (47) documents, some of which contained significant evidence of the merit of Plaintiff’s claims. As a result, the Court granted Plaintiff’s First Motion for Sanctions related to the belated production but refused to enter default judgment pursuant to Rule 37(b)(2)(A). Then, in April 2022, Plaintiff received additional electronic discovery from Defendants that should have been produced in 2019. In response, Plaintiff filed a Second Motion for Sanctions seeking, amongst other relief, default judgment.
Massachusetts is clear that “a party’s disregard of a court order is a paradigmatic example of extreme misconduct,” see Torres-Vargas v. Pereira, 431 F.3d 389. 393 (1st Cir. 2005), and violations are more severe if a party has flouted the court’s prior warning(s). See Robson v. Hallenbeck, 81 F.3d 1, 2 (1st Cir. 1996). Furthermore, district courts have broad authority to issue sanctions in response to a party’s failure to obey discovery orders, Robson, 81 F.3d at 2, so long as the sanctions are just and specifically related to the claim at issue in the order to provide discovery. Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 707 (1982).
Here, the Court evaluated the misconduct in the totality of the circumstances, focusing on factors including “the severity of the discovery violations, legitimacy of the party’s excuses for failing to comply, repetition of violations, deliberateness of the misconduct, mitigating excuses, prejudice to the other party and to the operations of the court, and the adequacy of lesser sanctions.” See AngioDynamics, Inc. v. Biolitec AG, 780 F.3d 429, 435 (1st Cir. 2015).
As a result, the Court refused to entertain Defendants’ arguments that any third-party was responsible. Ultimately, the Court sent a clear and deterrent message: lawyers should employ all reasonable, professional means to produce relevant, non-privileged ESI and should additionally observe all court orders related to such production. Any undue delay or prejudice to an opposing party in the absence of a legitimate reason for failure to comply with a court order may just cost you the case.
This case should serve as a cautionary tale to any penurious, unscrupulous, or downright duplicitous lawyers out there who believe discovery is an act of gamesmanship. As Judge Wolf said, “the law is not a game, and, as the court told defendants, civil discovery is not a game of hide and seek.”
For more information, please contact Janet Barringer at [email protected] or Andrew Vandini at [email protected] at Freeman, Mathis & Gary, LLP, or your local FMG Attorney.