United States District Court, D. Arizona
ORDER
Dominic W. Lanza United States District Judge.
Pending
before the Court is the Judgment Creditors' motion for
sanctions. (Doc. 190.) For the following reasons, the motion
will be granted in part and denied in part.
BACKGROUND
On
February 3, 2019, the Judgment Creditors served Wyo Tech with
a first request for production of documents
(“RFP”) and a first set of interrogatories.
(Docs. 126-1, 126-2.)
On
April 30, 2019, the parties filed a joint letter summarizing
a discovery dispute over Wyo Tech's response to those
requests. (Doc. 126.)
On May
1, 2019, following a hearing, the Court issued an order
requiring Wyo Tech “to comply with the two outstanding
discovery requests.” (Doc. 128.) In reaching this
conclusion, the Court rejected “Wyo Tech's
objection to the requests as being overbroad, ” finding
that “Wyo Tech has forfeited or waived its objections
for reasons as stated on the record. However, the Court will
not compel Wyo Tech to comply with the [Judgment
Creditors'] request for production #15.”
(Id.) The Court further ordered Wyo Tech to
“produce all material no later than May 15,
2019.” (Id.)
On
August 13, 2019, the Judgment Creditors filed the motion for
sanctions. (Doc. 190.) Afterward, Wyo Tech filed an
opposition (Doc. 210) and the Judgment Creditors filed a
reply (Doc. 220).
On
October 15, 2019, the Court issued a tentative ruling on the
Judgment Creditors' motion. (Doc. 256.)
On
October 30, 2019, the Court heard oral argument. (Doc. 277.)
DISCUSSION
A.
The Parties' Arguments
In
their motion for sanctions, the Judgment Creditors contend
that Wyo Tech still has not fully complied with their RFPs
and interrogatories, even though the Court set a May 15, 2019
deadline for compliance. (Doc. 190.) The motion begins by
summarizing an array of discovery-related emails and
communications that the parties exchanged between May 15,
2019 and July 24, 2019. (Id. at 1-9.) The Judgment
Creditors contend that, during this period, Wyo Tech
“play[ed] a game of cat and mouse with its discovery
responses, ” repeatedly “ma[de] a belated
production of documents, ” and “serv[ed] pithy,
useless interrogatory responses.” (Id.at 1.)
The Judgment Creditors then identify the following 11
categories of information that, in their view, Wyo Tech still
has not fully and/or properly disclosed:
1.
Persons with an ownership interest in Wyo Tech and
Inductance:[1]
The
Judgment Creditors contend that Wyo Tech merely provided a
general reference to the “documents previously
produced” and argue this response was insufficient
because Wyo Tech was required to identify the Bates numbers
of the documents that fully address this topic. (Id.
at 9-10.)
2.
Persons who performed services for Wyo
Tech:[2]
The
Judgment Creditors contend that Wyo Tech responded to this
interrogatory by merely cross-referencing its general ledger
and telling the Judgment Creditors that Wyo Tech
shouldn't be required to incur the expense necessary to
prepare a more detailed answer. (Id. at 11.) The
Judgment Creditors argue this response was insufficient
because (1) the Court already found that Wyo Tech waived any
overbreadth objections and (2) in any event, Wyo Tech
improperly failed to certify that the general ledger contains
all of the information that's responsive to this
interrogatory. (Id. at 11-12.)
3.
Purchases on Wyo Tech's behalf:[3]
The
Judgment Creditors contend that “Wyo Tech merely
referred to its bank statements and said that it is
‘still compiling this information.'”
(Id. at 12.) The Judgment Creditors contend this
response was insufficient because almost all of the
underlying invoices actually refer to a different company
(Inductance), not to Wyo Tech. (Id.)
4.
Wyo Tech's assets and liabilities:[4]
The
Judgment Creditors contend that Wyo Tech first referred to a
single document (an “Agreement to Release Intellectual
Property Rights”) and said “this information is
still being compiled, ” then later referred to a second
document (balance sheet as of December 31, 2018).
(Id. at 12-13.) The Judgment Creditors contend these
responses are insufficient because the balance sheet only
shows the assets and liabilities on a particular date, not
during the full time period covered by the interrogatories,
and doesn't break out each individual asset/liability or
show the relevant dates on which they were acquired or
incurred. (Id.)
5.
Invoices showing services performed and/or goods bought
for Wyo Tech by DAS or members of the Danzik
family:[5]
The
Judgment Creditors contend that “Wyo Tech did not
produce any receipts or invoices showing purported services
performed or goods bought by DAS or any of Mr. Danzik's
family members . . . that would support the hundreds of
thousands of dollars that Wyo Tech paid them” and
instead mistakenly claimed that a different set of invoices
(were directed to a different company, Inductance) were
responsive. (Id. at 13.) The Judgment Creditors
further contend that, when they pointed out this error,
“Wyo Tech's counsel then promised to get us an
explanation . . . but still has not done so.”
(Id.)
6.
Tax returns:[6]
The
Judgment Creditors contend that Wyo Tech did not produce any
tax returns and “insisted that Wyo Tech did not file
any tax return for 2017 or 2018.” (Id. at
13-14.) According to the Judgment Creditors, this assertion
is suspect because Wyo Tech has sent letters to its investors
referring to its prior tax filings. (Id.)
7.
Correspondence between Wyo Tech's counsel and Wyo
Tech's investors:[7]
The
Judgment Creditors contend that Wyo Tech refused to produce
any such correspondence based on the theory that it is
protected to the attorney-client privilege, yet Wyo
Tech's counsel has made clear during this case that it
doesn't represent any of the investors. (Id. at
14.)
8.
Wyo Tech's bank records:[8]
The
Judgment Creditors contend that Wyo Tech failed to produce
any bank records for the account ending in x2809 after
November 2017, even though the account remained open through
February 2018, and never followed up ...