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Court Orders Monetary Sanctions Against Client and Counsel for Discovery Violations, Including Counsel’s Failure to Make “Reasonable Inquiry”

Posted in CASE SUMMARIES

Play Visions, Inc. v. Dollar Tree Stores, Inc., No. C09-1769 MJP (W.D. Wash. June 8, 2011)

For discovery violations, including (among others) false certification that all relevant records were kept in paper format, delayed and inadequate production and failure to search for documents in a timely manner, and counsel’s failure to adequately familiarize himself with his client’s document retention practices or to assist in the production of documents, the court imposed monetary sanctions equal to the amount expended because of plaintiff’s discovery abuses, to be born by plaintiff and its counsel jointly and severally.

Despite its confidence early in the litigation, plaintiff eventually moved to voluntarily dismiss its case with prejudice.  While defendants did not oppose dismissal, they sought sanctions for plaintiff’s alleged pattern of discovery abuses.

The myriad of details surrounding the alleged discovery abuses need not be repeated in full.  Rather, to summarize broadly, plaintiff’s initial claim that it maintained all relevant documents only in hard copy and later representation that its production was complete turned out not to be true.  Indeed, it was revealed in the deposition of plaintiff’s CFO that the existence of electronically stored information was discovered months after receipt of the initial requests for production (and plaintiff’s initial responses), upon simply asking the IT consultant if he could search for and produce electronic records – a question no one had initially “bothered to ask.”  According to the CFO, “it was simply [Plaintiff’s] failure to ask [the consultant] or anyone else to run the electronic search that delayed the location and disclosure of the additional invoices.”  The CFO also revealed in deposition that “counsel provided little assistance … in making responsive discovery productions” and that counsel “was not involved in identifying records custodians, did nothing to familiarize himself with [Plaintiff’s] document retention and destruction policies, and did not assist in searching for or responding to Defendants’ first or second request for production.”  The deposition affirmed defendants’ understanding that “Plaintiff’s counsel relied on his client entirely to make responses to discovery requests.”

Defendants also came to learn that much of plaintiff’s expert report had in fact been written by counsel and then “approved” by the expert and that plaintiff had violated the court approved protective order by sharing confidential information with an “expert” that had not been properly disclosed.  Additionally, the court was troubled by attempts to change unfavorable deposition testimony regarding the expert report after the fact by using the “change sheet.”

The court found that sanctions were warranted pursuant to Rules 26 and 41.  With specific regard to the sanctions against counsel, the court noted that the counsel appeared “not to have abided by Rule 26(g)(1)’s requirement that his responses to the requests for production and other discovery requests were ‘formed after reasonable inquiry’” and highlighted the failures of counsel to become sufficiently involved in the discovery process as outline above.  The court reasoned that:

Counsel’s lack of investigation as to what document his client possessed caused innumerable delays and excess costs to Defendants, including those related to disputing the adequacy of discovery production, the 30(b)(6) deposition of Plaintiff’s CFO, and the motion for sanctions itself.  While counsel may trust his client, he must make reasonable inquiry into whether his client’s responses to discovery request are adequate.  Counsel must also familiarize himself with the documents in his client’s possession before certifying that production is complete.

Having found that sanctions were warranted, the court reviewed defendants’ billing records “noting every instance where [Defendants'] counsel performed work caused by [Plaintiff’s] misconduct” and, after some adjustment, ordered sanctions in the amount of $137,168.41 to be born by both plaintiff and its counsel jointly and severally.

The court also declined to shift attorneys’ fees.

A copy of the full opinion is available here.