United States District Court, D. Arizona
ORDER
DOMINIC W. LANZA UNITED STATES DISTRICT JUDGE.
Pending
before the Court is the parties' “Joint Written
Memorandum Regarding Remedies.” (Doc. 159.) In this
memorandum, Defendant Vaughn La Verl Wilhelm
(“Defendant”) asks the Court to impose about $27,
000 in sanctions against Plaintiffs under Rule 37. For the
following reasons, this request will be granted in part and
denied in part.
BACKGROUND
On
March 8, 2019, Defendant filed a motion for sanctions under
Rule 37(b)(2). (Doc. 134.) The motion was filed in response
to Plaintiffs' production, one week earlier, of a
“supplemental” MIDP disclosure that greatly
expanded Plaintiffs' damage theories. In a nutshell,
Defendant argued that (1) this late disclosure was improper
because Plaintiffs were required to disclose their damage
computations at the outset of the case, not on the eve of the
discovery cutoff, and (2) this late disclosure was
prejudicial because, had Defendant been aware of
Plaintiffs' various damage theories at the start of the
case, he would have conducted additional discovery and/or
hired additional experts. As a remedy, Defendant argued that
“sanctions in the form of exclusion of any evidence
supporting damages identified in Categories 1, 3, 4, 5, and 6
are appropriate.” (Id. at 6.) In the final
paragraph of the motion, Defendant also included a request
for “monetary sanctions in the form of attorneys fees
incurred in briefing this motion” and “any other
relief the Court deems to be just and proper.”
(Id. at 11.)
On June
17, 2019, after hearing argument from the parties, the Court
issued an order that granted in part, and denied in part,
Defendant's motion. (Doc. 151.) Although the Court
concluded that Plaintiffs' initial damage disclosure in
January 2018 was inadequate, the Court also noted that
Defendant “didn't raise any concerns about the
sufficiency of Plaintiffs' damage-related disclosures
until February 2019-13 months after they were initially
provided” and that “Plaintiffs' counsel
promptly addressed those concerns and provided detailed
computations . . . within 10 days of the request.”
(Id. at 5-6.) The Court further noted that, although
Plaintiffs' counsel also made misleading statements to
defense counsel during the discovery process about two
particular categories of damages, those statements should not
be viewed “as some sort of intentional attempt to
mislead” (id. at 9) and “were not the
product of ‘bad faith'” (id. at 12).
Given this backdrop, the Court concluded “it would be
improper to strike Plaintiffs' damage claims due to
untimely disclosure” and that “other options are
available here . . . to make [Defendant] whole.”
(Id. at 6, 9.) As examples of such “other
options, ” the Court noted that it might be appropriate
(1) to retroactively extend the expert-disclosure deadline so
Defendant could hire a damages expert, (2) to allow Defendant
to conduct “additional fact discovery” concerning
the late-disclosed damage theories, and/or (3) to require
Plaintiffs to pay for the costs associated with any
additional discovery. (Id. at 9, 12.) The Court thus
ordered the parties to meet-and-confer about, inter
alia, “what additional steps [Defendant] would
need to pursue to cure the prejudice arising from [the
misleading statements], how much such steps would cost, and
who should bear the associated expense.” (Id.
at 12.)
On July
8, 2019, the parties filed their “Joint Written
Memorandum Regarding Remedies.” (Doc. 159.) This
document reports that Plaintiffs have now agreed to
voluntarily dismiss all but one of their damage claims (the
negligence claim against Defendant for purportedly wasting
chemicals through negligent mixing). Defendant contends this
dismissal will not make him whole and argues he should be
awarded about $27, 000 in attorneys' fees. (Id.
at 4.)
DISCUSSION
In his
Rule 37 motion, Defendant asked the Court to throw out most
of Plaintiffs' damage claims because they weren't
timely disclosed. The Court declined to grant this request
because it was too severe and instead attempted to identify
other, less drastic mechanisms to cure the prejudice arising
from the late disclosure, such as allowing Defendant to hire
additional experts, conduct more discovery, and/or require
Plaintiffs to pay the costs associated with the additional
discovery. Nevertheless, after the Court ordered the parties
to meet and confer about exactly what such steps might look
like, Plaintiffs capitulated and agreed to dismiss all of the
damage claims at issue-the very remedy Defendant initially
sought. Defendant now asks for four categories of fees:
specifically, the fees he incurred (1) when briefing and
arguing the Rule 37 motion, (2) when responding to
Plaintiffs' counsel's misleading statements, (3) when
preparing a never-filed summary judgment motion on one of
Plaintiffs' now-withdrawn damage claims, and (4) when
pursuing discovery concerning some of Plaintiffs'
now-withdrawn damage claims. (Doc. 159 at 4.)
The
Court will grant this request as it pertains to the first
category of fees. Under Rule 37(b)(2)(C), “the court
must order the disobedient party, the attorney advising that
party, or both to pay the 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.” Here, the Court
already granted Defendant's Rule 37 motion in part and
Plaintiffs subsequently agreed to abandon their
late-disclosed damage theories. All of this suggests that
Defendant was justified in seeking relief under Rule 37, that
Plaintiffs' conduct wasn't substantially justified,
and that it wouldn't be unjust to require Plaintiffs to
reimburse Defendant for the cost of seeking relief.
In
contrast, the Court declines to make any fee award as to
second, third, and fourth categories of fees specified in the
joint memorandum. This portion of Defendant's fee request
is predicated on the notion that Plaintiffs didn't have a
good-faith basis for advancing some of the now-withdrawn
damage theories and that Defendant was forced to expend
unnecessary fees addressing those theories before they were
withdrawn. (See, e.g., Doc. 159 at 5 [“Had
Plaintiffs simply followed the mandate to perform adequate
factual and legal research before disclosing their new
damages theories on March 1[, 2019], none of these
proceedings would have occurred.”].) This is, in
essence, a Rule 11 claim. However, Defendant's sanctions
motion was predicated on Rule 37 and only sought the
exclusion of Plaintiffs' damage claims based on
when they were disclosed. Thus, the purpose of the
parties' joint memorandum was simply to follow up on the
Rule 37 analysis by outlining what additional expert- and
discovery-related steps Defendant might need to pursue to
address the belatedly-disclosed damage claims and who should
pay for those steps.
To be
sure, the Court made various statements during the hearing
and in its June 2019 order about the need to make Defendant
“whole.” Those statements, however, merely
reflected the Court's view that Defendant shouldn't
be prejudiced by the late timing of Plaintiffs'
disclosure of their damage computations and should be
afforded the opportunity to engage in whatever expert and
fact discovery was necessary to address those damage claims
on the merits. Thus, to the extent Defendant believes Rule 11
sanctions are warranted because Plaintiffs' decision to
pursue certain damage theories was substantively frivolous
(which is different from an untimely-disclosure theory), he
must file a new motion instead of tucking his request into a
joint memorandum on a different topic. This approach will
also provide Plaintiffs with a full and fair opportunity to
respond to any Rule 11 claim on the merits.
For all
of these reasons, Defendant may file a motion for
attorneys' fees limited to the fees incurred when
briefing and arguing the Rule 37 motion. That motion shall be
accompanied by an electronic Microsoft Excel spreadsheet, to
be emailed to the Court and opposing counsel, containing an
itemized statement of legal services with all information
required by Local Rule 54.2(e)(1). This spreadsheet shall be
organized with rows and columns and shall automatically total
the amount of fees requested to enable the Court to
efficiently review and recompute, if needed, the total amount
of any award after disallowing any individual billing
entries. This spreadsheet does not relieve the moving party
of its burden under Local Rule 54.2(d) to attach all
necessary supporting documentation to its motion. A party
opposing a motion for attorneys' fees shall email to the
Court and opposing counsel a copy of the moving party's
spreadsheet, adding any objections to each ...