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ABAIC October 2017

Discovery Disputes and Federal Rule 26(b)(1)'s Proportionality Standard

Written Materials Index 1. Federal Rule 26(b)(1)'s Proportionality Standard 2. Practice Tips for Discovery Disputes Involving the New Proportionality Standard 3. Gilead Sciences, Inc., v. Merck & Co., Inc., 2016 WL 146574 (N.D.Cal. Jan. 13, 2016) 4. In re SunEdison, Inc., 562 B.R. 243 (S.D.N.Y. Jan. 18, 2017) 5. Proportionality and E-Discovery: Managing and Navigating E-Discovery in Inherently

Disproportionate Adversary Matters 6. New Arizona Rule 26(b)(1)'s Proportionality Standard and Blacklined Amended Rules 7. Local Bankruptcy Rule 9013-1 8. Judges' Procedures Quick Reference 9. Practical Tips for Resolving Disputes without Incurring the Wrath of the Court 10. Opinions Addressing Local Rule 9013-1(e) 11. In re GTI Capital Holdings, L.L.C., 399 B.R. 247 (2008) 12. Triad Commer, Captive Co. v. Carmel (In re GTI Capital Holdings, L.L.C.), 2009 WL

7809930 (9th Cir. B.A.P. 2009) 13. Rules Similar to L.R. 9013-1 14. Nevada Power Co. v. Monsanto Power Co., 151 F.R.D. 118 (D.Nev. 1993) 15. Whiting v. Hogan, 2013 WL 1047012 (D.Ariz. March 14, 2013)

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ABAIC October 2017

Discovery Disputes

Federal Rule 26(b)(1)’s Proportionality Standard

• Text of Rule; Requirements of New Rule which took effect on 12/1/15

(b) Discovery Scope and Limits. (1) Scope in General. Unless

otherwise limited by court order, the scope of discovery is as

follows: Parties may obtain discovery regarding any nonprivileged

matter that is relevant to any party’s claim or defense and

proportional to the needs of the case, considering the importance

of the issues at stake in the action, the amount in controversy, the

parties’ relative access to relevant information, the parties’

resources, the importance of the discovery in resolving the issues,

and whether the burden or expense of the proposed discovery

outweighs its likely benefit. Information within this scope of

discovery need not be admissible in evidence to be discoverable.

Information within this scope of discovery need not be admissible

in evidence to be discoverable.

Fed.R.Civ.P. 26(b)(1); Fed.R.Bnkr.P. 7026 (bold emphasis added) (2017).

• A Change in the Standard- The New Test

This is a major change from the old Rule 26(b)(1) which stated that discovery must be

“reasonably calculated to lead to relevant evidence.” It was felt that the old rule allowed overly

broad discovery on the basis that the requests were disproportionate to the needs of the case.

The new test for a discovery dispute: Information must now be both relevant and proportional to

be discoverable.

• Intent behind the change in standard

The Advisory Committee added a committee note explaining that the amendment to Rule

26(b)(1) does not place the burden of proving proportionality on the party seeking discovery.

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Nor does it authorize boilerplate refusals to provide discovery on the ground that it is not

proportional. The intent is to prompt a dialogue among the parties and, if necessary, the judge,

concerning the amount of discovery reasonably needed to resolve the case.

http://www.frcpamendments2015.org/uploads/5/8/6/3/58636421/new_rules_new_opportunities_

_david_g._campbell_.pdf ("New Rules, New Opportunities").

The amended rule is intended to “encourage judges to be more aggressive in identifying

and discouraging discovery overuse” by emphasizing the need to analyze proportionality before

ordering production of relevant information. State Farm Mut. Auto. Ins. Co. v. Fayda, available

at 2015 WL 7871037, at *2 (S.D.N.Y. Dec. 3, 2015) (quoting Fed. R. Civ. P. 26(b)(1) advisory

committee’s notes to the 2015 amendments); see also Eramo v. Rolling Stone, Inc., 314 F.R.D.

205, available at 2016 WL 304319, at *2 (W.D.Va. Jan. 25, 2016).

• In re Bard

“In a high-profile MDL discovery order, a federal court has disallowed wide-ranging

discovery on the basis that the requests were disproportionate to the needs of the case” and

emphasized the “central role of proportionality” in an “attempt to put the reasonably calculated

standard to bed.” https://apps.americanbar.org/litigation/litigationnews/top_stories/022717-

rule26-proportionality.html summarizing In Re: Bard IVC Filters Products Liability Litigation,

317 F.R.D. 562, available at 2016 WL 4943393 (D.Ariz. Sept. 16, 2016).

• Definition of the new Proportionality Standard

The meaning of “proportional” discovery is discovery tailored to the reasonable needs of

the case. It affords enough information for a litigant to prove his or her case, but avoids excess

and waste. Unwarranted document production requests, excessive interrogatories, obstructive

responses to legitimate discovery requests, and unduly long depositions all result in

disproportionate discovery costs. See New Rules, New Opportunities, supra. Relevance should

still be construed broadly, because courts are “inclined to err in favor of discovery rather than

against it.” Steel Erectors, Inc. v. AIM International, Inc., 312 F.R.D. 673, available at 2016 WL

53881, at *3 (S.D.Georgia Jan. 4, 2016) (quotes and citations omitted); see also Fayda, at *2.

3 QB\48593383.1

• Burden on Resisting Party not Abrogated

The amended rule does “not alter the basic allocation of the burden on the party resisting

discovery to—in order to prevail on a motion for protective order or successfully resist a motion

to compel—specifically object and show that the requested discovery does not fall within Rule

26(b)(1)’s scope of relevance (as now amended) or that a discovery request would impose an

undue burden or expense or is otherwise objectionable or properly subject to a protective order.

Curtis v. Metro Life Ins. Co., available at 2016 WL 687164, at *3 (N.D.Tex. Feb. 19, 2016); see

also McKinney/Pearl Rest. Partners, L.P. v. Metro. Life Ins. Co., available at 2016 WL 98603,

at *4 (N.D. Tex. Jan. 8, 2016); Fayda, at *2.

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Practice Tips for Discovery Disputes Involving the New Proportionality Standard

To take full advantage of amended Fed.R.Civ.P. 26(b)(1)’s potential to streamline

discovery, practitioners must embrace the new mindset called for by Gilead Scis., Inc. v. Merck

& Co., Inc., available at 2016 WL 146574 (N.D.Cal. Jan. 13, 2016). This means focusing on

proportionality from the outset of a case:

• Review of the complaint should be done with an eye toward the potential for

phased discovery. Are there any dispositive issues, such as whether a statute

of limitations was tolled, that can be addressed before discovery on the merits

of the claims and defenses? Are there certain elements of a claim that will

require less discovery than others while supporting a strong dispositive

motion? What are the most significant issues on which discovery will be

needed? What issues are more ancillary?

• Early conversations with your client should also focus on the potential for

phased discovery by discussing the sources of records and burdens of each.

Who are the records custodians? Are some more relevant than others? What is

involved in collecting data from these custodians? What is the time and cost

associated with preserving, collecting, reviewing, and producing the most

relevant data? What is the time and cost associated with adding custodians,

keywords, or date ranges to a search?

• Have a conversation with opposing counsel: This new mindset means closer

cooperation with opposing counsel and taking advantage of the increasing

willingness of the federal courts post-amendment to engage early on discovery

issues. “[T]he revised rule places a shared responsibility on all the parties to

consider the factors bearing on proportionality before propounding discovery

requests, issuing responses and objections, or raising discovery disputes

before the courts.” Salazar v. McDonald’s Corp., available at 2016 WL

736213, at *2 (N.D. Cal. Feb. 25, 2016).

6 QB\48593383.1

http://apps.americanbar.org/litigation/committees/pretrial/articles/spring2016-0516-

proportionality-amended-rule-26b1-new-mindset.html

3

Gilead Sciences, Inc. v. Merck & Co, Inc., Not Reported in F.Supp.3d (2016)

© 2017 Thomson Reuters. No claim to original U.S. Government Works. 1

KeyCite Yellow Flag - Negative Treatment

 Declined to Follow by Lopez v. United States, S.D.Cal., March

21, 2017

2016 WL 146574Only the Westlaw citation

is currently available.United States District Court,

N.D. California.

Gilead Sciences, Inc., Plaintiff,v.

Merck & Co, Inc.,et al., Defendants.

Case No. 5:13-cv-04057-BLF|

Signed 01/13/2016

Attorneys and Law Firms

Douglas E. McCann, Elizabeth M.Flanagan, Gregory Robert Booker,Joseph B. Warden, Kelly A. Del Dotto,Robert M. Oakes, Fish RichardsonPC, Wilmington, DE, Jonathan ElliotSinger, Fish & Richardson, P.C., P.A.,Minneapolis, MN, Juanita R. Brooks,Fish & Richardson P.C., San Diego,CA, Matthew Lore Levine, Law Officesof Matthew L. Levine, PLLC, NewYork, NY, John Michael Farrell,Rebecca Charnas Grant, Fish andRichardson, PC, Tamara E. Fraizer,Attorney at Law Fish & RichardsonP.C., Redwood City, CA, for Plaintiff.

Stanley E. Fisher, Jessamyn SheliBerniker, Bruce R. Genderson,Williams & Connolly, LLP,Washington, DC, Patrice PolyxeneJean, Wanda French-Brown, Stefanie

Michelle Lopatkin, Mitchell E. Epner,David Lansky, Stephen SolomonRabinowitz, James W. Dabney,Hughes Hubbard & Reed LLP, NazErdeniz Wehrli, Randy C. Eisensmith,Fried, Frank Harris, Shriver, et al, NewYork, NY, Joshua H. Lerner, LauraElizabeth Miller, Durie Tangri LLP,San Francisco, CA, for Defendants.

ORDER DENYINGMOTION TO COMPEL

(Re: Docket No. 158)

PAUL S. GREWAL, United StatesMagistrate Judge

*1 Proportionality in discovery underthe Federal Rules is nothing new.Old Rule 26(b)(2)(C)(iii) was clearthat a court could limit discoverywhen burden outweighed benefit, andold Rule 26(g)(1)(B)(iii) was clearthat a lawyer was obligated tocertify that discovery served was notunduly burdensome. New Rule 26(b)(1), implemented by the December 1,2015 amendments, simply takes thefactors explicit or implicit in these oldrequirements to fix the scope of alldiscovery demands in the first instance.

What will change—hopefully—ismindset. No longer is it good enough tohope that the information sought mightlead to the discovery of admissibleevidence. In fact, the old languageto that effect is gone. Instead, a

Gilead Sciences, Inc. v. Merck & Co, Inc., Not Reported in F.Supp.3d (2016)

© 2017 Thomson Reuters. No claim to original U.S. Government Works. 2

party seeking discovery of relevant,non-privileged information must show,before anything else, that the discoverysought is proportional to the needs of

the case. 1 The present dispute offersa good example of the wisdom of theAdvisory Committee on Civil Rulesin elevating proportionality in definingthe scope of permissible discovery.

Merck asserts that Gilead infringestwo of its patents to a certain kind

of nucleoside analog. 2 Among otherthings, Gilead says it was the one toconceive and reduce to practice theinventions, in 2003, in a compound

named PSI-6130. 3 And so a key issue inthis case is what did Gilead synthesizeand when did it know it.

As part of a related litigationin Canada, Gilead's expert Dr.Christopher Seeger produced aphotograph of various tubes of

compounds. 4 At least one of thetube labels lists a molecular weight

of 259.2, the weight of PSI-6130. 5

In a later deposition in this case,Seeger testified that he got thecompounds before 2003 from thefounder of an entity later acquired

by Gilead. 6 Given the importanceof figuring out when Gilead firstsynthesized the disputed compound,Merck immediately demanded furtherproduction of further informationabout the tubes and their contents,

including the tubes themselves. 7 At this

point, Merck would seem to be on solidground in making its demands.

But lots of compounds share the samemolecular weight. In fact, Merck's ownpatents list different nucleosides that

share the same molecular weight. 8

Most importantly, Merck has long hadinformation from Gilead that confirmsthat the tubes in question held PSI-0194and PSI-1834, two entirely different

nucleosides from PSI-6130. 9 Thisinformation includes the laboratorynotebook from the chemist at theGilead acquisition that identifies thecompounds as PSI-0194 and not

PSI-6130. 10 Gilead also provided afurther letter from Seeger's source thatconfirmed that the compounds werenot PSI-6130, the compound Merck

sought. 11 Not satisfied, Merck presseson, protesting that it should not have totake Gilead's word as to what exactly isin those tubes.

*2 Merck's demands are exactlythe type of disproportionate demandsthat Rule 26(b)(1) proscribes. Sure,it's possible that Gilead's evidenceconfirming the compounds are notPSI-6130 is false and even concocted.But Merck offers no real evidencethat this is the case, and as the courtrecently explained in denying a motionto compel by Gilead, “[w]ithout morespecific information triggering somereason for doubt, the Court must take

the producing party...at its word.” 12

Gilead Sciences, Inc. v. Merck & Co, Inc., Not Reported in F.Supp.3d (2016)

© 2017 Thomson Reuters. No claim to original U.S. Government Works. 3

And so that leaves Gilead in theposition of having to produce discoveryon all sorts of compounds that bear noindication of any nexus to the disputesin this case. This is untenable. Itwould be like requiring GM to producediscovery on Buicks and Chevys ina patent case about Cadillacs simplybecause all three happen to be cars.In the absence of any reason todoubt the proof Gilead has tenderedabout the identity of the disputedcompounds, and given the cost andpotential delay introduced by therequested production, Merck's request

is precisely the kind of disproportionatediscovery that Rule 26—old or new—

was intended to preclude. 13

Merck's motion to compel is DENIED.

SO ORDERED.

All Citations

Not Reported in F.Supp.3d, 2016 WL146574

Footnotes1 See Fed. R. Civ. P. 26(b)(1).

2 See Docket No. 158 at 4-5.

3 See id.

4 See id. at 8.

5 See id.

6 See id. at 9.

7 See id. at 11. Merck also demanded a further deposition of another witness, Dr. John Secrist, but has sincedropped that demand. See id. at 23; Docket No. 180-4 at 10-11.

8 See Docket No. 173 at 16 n.57.

9 See id. at 12

10 See Docket No. 159-40.

11 See Docket no. 173 at 3-4.

12 Docket No. 210 at 8 (quoting Aristocrat Techs. v. Int'l Game Tech., Case No. C 06-03717 RMW (RS), 2009WL 3573327, at *3 (N.D. Cal. Oct. 30, 2009)).

13 Merck also argues that the requested discovery is relevant to impeaching Seeger's credibility. See DocketNo. 180-4 at 7. However, in making this point, Merck refers to documents produced by Gilead to point outinconsistencies with Seeger's deposition testimony. See id. In other words, Merck's papers show that italready has the material it needs to challenge Seeger's credibility, and the further discovery it seeks wouldbe cumulative and disproportionate to the needs of the case.

End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works.

Gilead Sciences, Inc. v. Merck & Co, Inc., Not Reported in F.Supp.3d

© 2017 Thomson Reuters. No claim to original U.S. Government Works. 4

Negative Treatment

Negative Citing References (2)

The KeyCited document has been negatively referenced by the following events ordecisions in other litigation or proceedings:

Treatment Title Date Type Depth Headnote(s)

Declined toFollow by

1. Lopez v. United States

2017 WL 1062581 , S.D.Cal.In this discovery dispute over whether a second siteinspection of an elevator platform aboard a UnitedStates Navy warship should be ordered, the Courtconsiders a new argument...

Mar. 21, 2017 Case —

Distinguishedby

2. Engage Healthcare Communications, LLC v.Intellisphere, LLC

2017 WL 3624262

Apr. 26, 2017 Other — —

Gilead Sciences, Inc. v. Merck & Co, Inc., Not Reported in F.Supp.3d

© 2017 Thomson Reuters. No claim to original U.S. Government Works. 5

History (16)

Direct History (1) 1. Gilead Sciences, Inc. v. Merck & Co, Inc.

2016 WL 146574 , N.D.Cal. , Jan. 13, 2016

Related References (15)2. NUCLEOSIDE DERIVATIVES AS INHIBITORS OF RNA-DEPENDENT RNA VIRALPOLYMERASEUS PAT 7105499 , U.S. PTO Utility , Sep. 12, 2006

Construed by

3. Gilead Sciences, Inc. v. Merck & Co, Inc.2015 WL 2062575 , N.D.Cal. , May 01, 2015

4. NUCLEOSIDE DERIVATIVES AS INHIBITORS OF RNA-DEPENDENT RNA VIRALPOLYMERASEUS PAT 8481712 , U.S. PTO Utility , July 09, 2013

Construed by

5. Gilead Sciences, Inc. v. Merck & Co, Inc.2015 WL 2062575 , N.D.Cal. , May 01, 2015

6. Gilead Sciences, Inc. v. Merck & Co, Inc.2016 WL 107484 , N.D.Cal. , Jan. 11, 2016

Motion for Relief from Judgment Denied by

7. Gilead Sciences, Inc. v. Merck & Co, Inc.2016 WL 7911364 , N.D.Cal. , Feb. 03, 2016

Gilead Sciences, Inc. v. Merck & Co, Inc., Not Reported in F.Supp.3d

© 2017 Thomson Reuters. No claim to original U.S. Government Works. 6

8. Gilead Sciences, Inc. v. Merck & Co, Inc.2016 WL 7839104 , N.D.Cal. , Feb. 01, 2016

9. Gilead Sciences, Inc. v. Merck & Co, Inc.2016 WL 742012 , N.D.Cal. , Feb. 25, 2016

10. Gilead Sciences, Inc. v. Merck & Co, Inc.2016 WL 3143943 , N.D.Cal. , June 06, 2016

Appeal Filed by

11. GILEAD SCIENCES, INC. v. MERCK & CO., INC., Fed.Cir. , July 06, 2016

AND Appeal Filed by

12. GILEAD SCIENCES, INC. v. MERCK & CO., INC., Fed.Cir. , Sep. 07, 2016

13. Gilead Sciences, Inc. v. Merck & Co, Inc.2016 WL 4242216 , N.D.Cal. , Aug. 11, 2016

Appeal Filed by

14. GILEAD SCIENCES, INC. v. MERCK & CO., INC., Fed.Cir. , Oct. 06, 2017

15. Gilead Sciences, Inc. v. Merck & Co., Inc.2017 WL 3007071 , N.D.Cal. , July 14, 2017

Appeal Filed by

Gilead Sciences, Inc. v. Merck & Co, Inc., Not Reported in F.Supp.3d

© 2017 Thomson Reuters. No claim to original U.S. Government Works. 7

16. GILEAD SCIENCES, INC. v. MERCK & CO., INC., Fed.Cir. , Oct. 06, 2017

Gilead Sciences, Inc. v. Merck & Co, Inc., Not Reported in F.Supp.3d

© 2017 Thomson Reuters. No claim to original U.S. Government Works. 8

Citing References (63)

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Discussed by 1. Starline Windows Inc. v. Quanex BuildingProducts Corp. 2016 WL 4485568, *5+ , S.D.Cal.

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Discussed by 2. Plaintiff's Supplemental Memorandumin Support of Plaintiff's Motion to CompelMonsanto's Responses to Requests forProduction Nos. 10, 13, and 23 Elisabeth MARTIN, on behalf of herself, all otherssimilarly situated, and the general public, Plaintiff, v.MONSANTO COMPANY, Defendant.2017 WL 2772912, *1+ , C.D.Cal. (Trial Motion,Memorandum and Affidavit)

Mar. 21, 2017 Motion —

Discussed by 3. Polaris's Notice of Motion to Compel andJoint Stipulation Regarding Polaris's Motion toCompel POLARIS INNOVATIONS LIMITED, an Irish limitedcompany, Plaintiff, v. KINGSTON TECHNOLOGYCOMPANY, INC., a Delaware corporation,Defendant. KINGSTON TE...2017 WL 548820, *1+ , C.D.Cal. (Trial Motion,Memorandum and Affidavit)

Jan. 25, 2017 Motion —

Discussed by 4. Defendant R.T.G. Furniture Corp.'sMemorandum of Law in Opposition to Plaintiffs'Motion to Compel Benjamin HANKINSON, James Guerra, andJeanette Gandolfo, individually and on behalfof others similarly situated, Plaintiffs, v. R.T.G.FURNITURE CORP...2016 WL 1729323, *1+ , S.D.Fla. (Trial Motion,Memorandum and Affidavit)

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Discussed by 5. Joint Case Management Statement Lynne COATES, Serena Neves, Keever Rhodes,Celeste Stokes, and Karen Wasson, on behalf ofthemselves and all others similarly situated andaggrieved, ...2016 WL 1072246, *1+ , N.D.Cal. (Trial Filing)

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Declined toFollow by

6. Lopez v. United States2017 WL 1062581, *5 , S.D.Cal.

In this discovery dispute over whether a second siteinspection of an elevator platform aboard a UnitedStates Navy warship should be ordered, the Courtconsiders a new argument...

Mar. 21, 2017 Case —

Cited by 7. IMDb.com, Inc. v. Becerra2017 WL 2859063, *2 , N.D.Cal.

CIVIL RIGHTS - Free Speech. California'sdiscovery requests in First Amendment actionchallenging California statute were not relevant toany party's claim or defense.

June 27, 2017 Case —

Gilead Sciences, Inc. v. Merck & Co, Inc., Not Reported in F.Supp.3d

© 2017 Thomson Reuters. No claim to original U.S. Government Works. 9

Treatment Title Date Type Depth Headnote(s)

Cited by 8. Polaris Innovations Limited v. KingstonTechnology Company, Inc. 2017 WL 3275615, *6 , C.D.Cal.

Before the Court is plaintiff Polaris InnovationsLimited's (“Polaris's”) Motion to Compel (the“Motion”) various discovery responses fromdefendant Kingston Technology Company,...

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Plaintiff Federal Trade Commission (the ''FTC'')moves for sanctions against Defendant DIRECTV,INC. (''DIRECTV'') pursuant to Federal Rule of CivilProcedure 37(e)(1). Mot., Dkt....

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Currently pending before the Court are the parties'joint discovery letter briefs (Dkt. Nos. 157, 158.)The Court deems the matter suitable for dispositionwithout a hearing...

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Cited by 11. Sinohui v. CEC Entertainment, Inc. 2016 WL 2743458, *5 , C.D.Cal.

On April 14, 2016, Defendant CEC Entertainment,Inc. (“Defendant”) filed a Motion to CompelResponses to Requests for Production ofDocuments and Interrogatories (“Motion to...

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This is a wage and hour putative class actionbrought on behalf of current and former McDonald'srestaurant crew members at eight Bay Arearestaurants that are or were franchised...

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Plaintiff Hong–Ngoc Dao (“Dao”) filed this lawsuitagainst her insurer Liberty Life Assurance Companyof Boston (“Liberty”) based on its alleged wrongfuldenial of a long term...

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2016 WL 4987110, *3+ , D.Del.

At Wilmington this 16th day of September, 2016,the court having considered the letter briefs andarguments presented by the parties regarding themotion to compel discovery filed...

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This matter comes before the court upon Plaintiffs'Motion to Compel Disclosure (ECF No. 51).Plaintiffs Herberto and Elba Unzueta, on behalf oftheir minor daughter, seek to...

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© 2017 Thomson Reuters. No claim to original U.S. Government Works. 10

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Plaintiff Mylan Pharmaceuticals Inc. (“Mylan”)appeals Magistrate Judge Hammer's (the“Magistrate Judge”) order, (D.E. No. 128 ¶ 4),denying Mylan's motion to compel certain...

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© 2017 Thomson Reuters. No claim to original U.S. Government Works. 11

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Gilead Sciences, Inc. v. Merck & Co, Inc., Not Reported in F.Supp.3d

© 2017 Thomson Reuters. No claim to original U.S. Government Works. 12

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Cited by 29. Nonparty Sebastien De Halleux's Noticeof Motion and Motion to Quash DepositionSubpoena Issued by Plaintiff Social Ranger,LLC; Supporting Memorandum...SOCIAL RANGER, LLC, Plaintiff, v. FACEBOOK,INC., Defendant.2016 WL 5958117, *1+ , N.D.Cal. (Trial Motion,Memorandum and Affidavit)

Sep. 27, 2016 Motion —

Cited by 30. Defendant Facebook, Inc.'s Oppositionto Plaintiffs' Motion to Compel Production of"Configuration Tables" Matthew CAMPBELL and Michael Hurley, Plaintiffs,v. FACEBOOK, INC., Defendant.2016 WL 4527436, *1 , N.D.Cal. (Trial Motion,Memorandum and Affidavit)

Aug. 19, 2016 Motion —

Cited by 31. Defendant Facebook, Inc.'s Oppositionto Plaintiffs' Motion to Compel Production ofDocuments Matthew CAMPBELL and Michael Hurley, Plaintiffs,v. FACEBOOK, INC., Defendant.2016 WL 4527454, *1 , N.D.Cal. (Trial Motion,Memorandum and Affidavit)

Aug. 19, 2016 Motion —

Cited by 32. Defendant Facebook, Inc.'s Oppositionto Plaintiffs' Motion to Compel Production ofSource Code Matthew CAMPBELL and Michael Hurley, Plaintiffs,v. FACEBOOK, INC., Defendant.2016 WL 4527463, *1 , N.D.Cal. (Trial Motion,Memorandum and Affidavit)

Aug. 19, 2016 Motion —

Cited by 33. Defendant Sourceamerica's Reply inSupport of Consolidated Motion to CompelPlaintiff Bona Fide Conglomerate, Inc.'s FurtherResponses to Sourceameric...BONA FIDE CONGLOMERATE, INC., Plaintiff,v. SOURCEAMERICA, PRIDE Industries, Inc.,Kent, Campa & Kate, Inc., ServiceSource, Inc., JobOptions, Inc., G...2017 WL 3000837, *1 , S.D.Cal. (Trial Motion,Memorandum and Affidavit)

June 09, 2017 Motion —

Cited by 34. Memorandum of Law in Opposition to LeadPlaintiffs' Motion to Compel DiscoveryLou BAKER, individually and on behalf of allothers similarly situated, Plaintiff, v. SEAWORLDENTERTAINMENT, INC., et al., Defendants.2017 WL 3000866, *1+ , S.D.Cal. (Trial Motion,Memorandum and Affidavit)

Apr. 12, 2017 Motion —

Cited by 35. Defendants' Opposition to Lead Plaintiffs'Motion to Compel Discovery Leonard HOWARD, individually and on behalf ofall others similarly situated, Plaintiff, v. LIQUIDITYSERVICES, INC., William P. Angrick, III, andJame...2016 WL 8222049, *1 , D.D.C. (Trial Motion,Memorandum and Affidavit)

Sep. 13, 2016 Motion —

Gilead Sciences, Inc. v. Merck & Co, Inc., Not Reported in F.Supp.3d

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Treatment Title Date Type Depth Headnote(s)

Cited by 36. Ally Financial Inc.'s Opposition to Plaintiff'sMotion to Compel Donell L. TILLMAN, individually and on behalfof all others similarly situated, Plaintiff, v. ALLYFINANCIAL INC., Defendant.2016 WL 8459381, *1 , M.D.Fla. (Trial Motion,Memorandum and Affidavit)

Dec. 13, 2016 Motion —

Cited by 37. Defendants Banner Life Insurance Companyand William Penn Life Insurance Company ofNew York's Opposition to Plaintiff's Motion forEntry of Protectiv... JWD AUTOMOTIVE, INC. d/b/a NAPA Auto Care ofCape Coral, a Florida corporation, individually andas the representative of a class of similarly-situate...2016 WL 8469121, *1 , M.D.Fla. (Trial Motion,Memorandum and Affidavit)

Oct. 03, 2016 Motion —

Cited by 38. Plaintiff's Combined Response to"Defendants' Motion to Strike InadequatePrivilege Log, Alternative Motion to Compel andIncorporated Memorandum of L...UNITED STATES COMMODITY FUTURESTRADING COMMISSION, Plaintiff, v. MINTCOLLC, Richard Q. Zimmerman, and Stuart Rubin,Defendants.2016 WL 4061710, *1 , S.D.Fla. (Trial Motion,Memorandum and Affidavit)

July 20, 2016 Motion —

Cited by 39. Defendant Caterpillar Inc.'s Opposition toPlaintiff's Motion to Compel Discovery FREEMAN EQUIPMENT, INC., Plaintiff, v.CATERPILLAR INC., Defendant.2017 WL 3669887, *1 , N.D.Ill. (Trial Motion,Memorandum and Affidavit)

Jan. 04, 2017 Motion —

Cited by 40. Ford Motor Company's Response inOpposition to Plaintiffs' Motion to Compel Dan GAILLET, Individually, and Bethany Gaillet,Individually and as Conservator of Robert Gaillet, aMinor, Plaintiffs, v. FORD MOTOR COMPANY, ACorpo...2016 WL 3435050, *1+ , S.D.Miss. (Trial Motion,Memorandum and Affidavit)

June 03, 2016 Motion —

Cited by 41. State Farm's Suggestions in Support of ItsObjection to and Motion to Vacate or Modifythe Special Master's Discovery Order No. 4 (AsAmended)Amanda LABRIER, et al., Plaintiffs, v. STATEFARM FIRE AND CASUALTY COMPANY,Defendant.2016 WL 8670781, *1+ , W.D.Mo. (Trial Motion,Memorandum and Affidavit)

Apr. 13, 2016 Motion —

Cited by 42. Kashiv Pharma, LLC's Memorandum of Lawin Opposition to Plaintiffs' Motion to CompelSHIRE DEVELOPMENT LLC, Shire PharmaceuticalDevelopment Inc., Cosmo Technologies Limited,and Nogra Pharma Limited, Plaintiffs, v. AMNEALPHARMACEUTIC...2016 WL 9448509, *1+ , D.N.J. (Trial Motion,Memorandum and Affidavit)

Aug. 25, 2016 Motion —

Gilead Sciences, Inc. v. Merck & Co, Inc., Not Reported in F.Supp.3d

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Treatment Title Date Type Depth Headnote(s)

Cited by 43. Plaintiff Oklahoma Gas and ElectricCompany's Response to Defendants ToshibaInternational Corporation's and Regenco, LLC'sJoint Motion to Compel OKLAHOMA GAS AND ELECTRIC COMPANY,Plaintiff, v. TOSHIBA INTERNATIONALCORPORATION, Regenco, LLC and NationalElectric Coil Company, L.P., Defendants.2016 WL 4448302, *1 , W.D.Okla. (Trial Motion,Memorandum and Affidavit)

July 29, 2016 Motion —

Cited by 44. Defendants' Opposition to Lead Plaintiff'sMotion to Compel the Production of DocumentsWilliam E. BURGES and Rose M. Burges,Individually and on Behalf of All Others SimilarlySituated, Plaintiffs, v. BANCORPSOUTH, INC., etal., Defendan...2016 WL 1578668, *1+ , M.D.Tenn. (Trial Motion,Memorandum and Affidavit)

Mar. 24, 2016 Motion —

Cited by 45. Plaintiff's Memorandum in Support of itsMotion to Overrule Objections to Requestsfor Production and Compel Disclosure byDefendant JLG Industries, I...Billy Jo HUMPHRIES, Plaintiff, v. JLGINDUSTRIES, INC., et al, Defendants.2017 WL 2722801, *1 , E.D.Va. (Trial Motion,Memorandum and Affidavit)

May 05, 2017 Motion —

Cited by 46. Joint Statement Regarding DiscoveryDispute Regarding Motion to CompelProduction of Documents and Entry of Order onDiscovery Search Protocol Kristi LAURIS, et al., Plaintiffs, v. NOVARTIS AG, etal., Defendants.2016 WL 9665269, *1+ , E.D.Cal. (Trial Filing)

Nov. 09, 2016 Filing —

Cited by 47. Trial Filing ORACLE AMERICA, INC., et al, v. HEWLETTPACKARD ENTERPRISE COMPANY.2016 WL 6098494, *1 , N.D.Cal. (Trial Filing)

Sep. 22, 2016 Filing —

Cited by 48. Joint Case Management ConferenceStatementMatthew CAMPBELL and Michael Hurley, on behalfof themselves and all others similarly situated,Plaintiffs, v. FACEBOOK, INC., Defendant.2016 WL 3876900, *1 , N.D.Cal. (Trial Filing)

June 23, 2016 Filing —

Mentioned by 49. United States v. Real Property Located at6107 Hogg Road, Marsing, Owyhee County,Idaho2017 WL 132838, *2 , D.Idaho

Pending before the Court are seven motions: (1)Claimant Ponzo's Motion for Discovery IncludingDepositions (Dkt. 126); (2) Ponzo's Second Motionfor Continuance of Dispositive...

Jan. 13, 2017 Case —

Gilead Sciences, Inc. v. Merck & Co, Inc., Not Reported in F.Supp.3d

© 2017 Thomson Reuters. No claim to original U.S. Government Works. 15

Treatment Title Date Type Depth Headnote(s)

Mentioned by 50. Lonn v. Corizon Health2016 WL 6433846, *2 , D.Idaho

Before the Court are Plaintiff's motions to compeland to extend deadlines, which contend DefendantAgler's discovery responses are inadequate andmore time is required to conduct...

Oct. 27, 2016 Case —

— 51. Annotated Patent Digest (Matthews) s 41:8,The Federal Rules standard for relevancy

As amended on December 1, 2000 and beforebeing rewritten in 2015, Rule 26(b)(1) of the FederalRules of Civil Procedure provided [1] Parties mayobtain discovery regarding any...

2017 OtherSecondarySource

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— 52. S 2.09 DEFENDING AGAINST REQUESTSFOR ELECTRONIC EVIDENCEElectronic Discovery: Law and Practice

Last Updated: 11/2016 Although the productionof electronic data is clearly permitted under theFederal Rules, the discovery of such evidence issubject to limitations set forth in...

2016 OtherSecondarySource

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— 53. S 5.02 THE FEDERAL RULES OF CIVILPROCEDUREElectronic Discovery: Law and Practice

Last Updated: 11/2016 The vast majority of cost-shifting cases have arisen in the federal courts. It istherefore useful to briefly review certain aspects ofthe Federal Rules of...

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— 54. ERISA Practice and Litigation s 11:67,Discovery practiceERISA Practice and Litigation

In ERISA litigation, discovery practice will begoverned by the familiar rules and standards ofthe Federal Rules of Civil Procedure and relatedrequirements, including case law....

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— 55. Intellectual Property Litigation: PretrialPractice s 8.06, RELEVANCE: GENERALSURVEY OF DISCOVERABLE SUBJECTMATTERIntellectual Property Litigation: Pretrial Practice

The cases in this section were selected to illustratethe scope of subject matter commonly disputed inmodern intellectual property litigation. The disputesin the cases arose in...

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— —

— 56. FEDERAL RULES UPDATE79 The Advoc. (Texas) 103 , 113

I. INTRODUCTION. 1 II. COOPERATION. 1 III.CASE MANAGEMENT. 1 A. Rule 4(m) Summons(2015 and 2016 amendments). 1 B. Rule 6(d):Computing and Extending Time (2016 Amendment).1 C....

2017 Law Review — —

— 57. THE PROPORTIONALITY PRINCIPLE AFTERTHE 2015 AMENDMENTS83 Def. Couns. J. 241 , 248+

Rule 26(b)(1) was revised as part of the 2015Amendments to the Federal Rules of CivilProcedure to promote ''proportional discovery'' bythe incorporation of proportionality...

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Gilead Sciences, Inc. v. Merck & Co, Inc., Not Reported in F.Supp.3d

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Treatment Title Date Type Depth Headnote(s)

— 58. THE EVOLUTION OF AMERICANDISCOVERY IN LIGHT OF CONSTITUTIONALCHALLENGES: THE ROLE OF THE 2015 RULEAMENDMENTS TO THE FEDERAL RULES OFCIVIL PROCEDURE44 Hastings Const. L.Q. 225 , 246+

Those civil tribunals, far more than the inherentlyuncivilized dueling fields they supplanted, mustbe governed by sound rules of practice andprocedure .. --Chief Justice John...

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— 59. CALLING AN END TO CULLING:PREDICTIVE CODING AND THE NEW FEDERALRULES OF CIVIL PROCEDURE23 Rich. J.L. & Tech. 5 , 40+

L1-2Table of Contents I. Introduction. 2 II. WhyTiming Matters in Predictive Coding. 4 A. TheTechnical Difference Between the Two Methods. 5 B. The Practical...

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— 60. 061616 American Bankruptcy Institute 163,CONCURRENT SESSION: Consumer Track:Discovery: It's a Whole New BallgameAmerican Bankruptcy Institute

Appendices: Given a trustee's broad duties and therobust procedural tools at hand for enforcing them,particularly the threat of an action to deny or revokean individual debtor's...

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— 61. SY002 American Law Institute ContinuingLegal Education 1581, GUIDELINES ANDPRACTICES FOR IMPLEMENTING THE 2015DISCOVERY AMENDMENTS TO ACHIEVEPROPORTIONALITY

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— 62. BIG DATA ON THE OPEN ROAD Howthe Amended Rules of Civil Procedure WillAffect Transportation Industry ESI Discovery inFederal CourtsDRI For the Defense

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— 63. P 79,658 MYLAN PHARMACEUTICALS INC.,PLAINTIFF V. CELGENE CORP., DEFENDANT.Trade Regulation Reporter

Mylan Pharmaceuticals Inc., Plaintiff v. CelgeneCorp., Defendant. 2016-1 Trade Cases ¶ 79,658.U.S. District Court, D. New Jersey. Civil Action No.14-2094 (ES)(MAH). Dated May...

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4

In re SunEdison, Inc., 562 B.R. 243 (2017)

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562 B.R. 243United States Bankruptcy Court,

S.D. New York.

IN RE: SUNEDISON, INC. et al. 1 Debtors.

Case No. 16–10992 (SMB)|

Signed January 18, 2017

SynopsisBackground: Creditor of subsidiary of one of Chapter 11debtors, to which that debtor was also liable on guaranteeof subsidiary's debt, filed request pursuant to BankruptcyRule 2004 for production of documents relating to sale ofsubsidiary's assets and upstreaming of sales proceeds todebtors. Debtors objected.

[Holding:] The Bankruptcy Court, Stuart M. Bernstein, J.,held that creditor was not entitled to broad production of“all documents and communications” relating to sale ofassets and upstreaming of sales proceeds.

So ordered.

West Headnotes (7)

[1] BankruptcyExamination and Discovery

BankruptcyProceedings and order

Party seeking Rule 2004 examination bearsburden of showing “good cause” for theexamination it seeks. Fed. R. Bankr. P. 2004.

2 Cases that cite this headnote

[2] BankruptcyExamination and Discovery

Grant of request for Rule 2004 examinationlies within sound discretion of bankruptcycourt. Fed. R. Bankr. P. 2004.

Cases that cite this headnote

[3] BankruptcyExamination and Discovery

Party seeking to conduct a Rule 2004examination generally shows the requisite“good cause” by establishing that proposedexamination is necessary to establish its claim,or that denial of examination will cause itundue hardship or injustice. Fed. R. Bankr. P.2004.

2 Cases that cite this headnote

[4] BankruptcyScope and Extent of Inquiry

In ruling on request for leave to conduct aRule 2004 examination, court must balancethe competing interests of parties, weighingthe relevance of and necessity of theinformation sought by examination. Fed. R.Bankr. P. 2004.

3 Cases that cite this headnote

[5] BankruptcyProduction of documents

Mere fact that documents which are thesubject of Rule 2004 request meet therequirement of relevance does not alonedemonstrate that there is “good cause” forrequiring their production. Fed. R. Bankr. P.2004.

Cases that cite this headnote

[6] BankruptcyProduction of documents

Creditor of subsidiary of one of Chapter11 debtors, to which that debtor was alsoliable on guarantee of subsidiary's debt, wasnot entitled, on request for production ofdocuments pursuant to Bankruptcy Rule2004, to broad production of “all documentsand communications” that “relate[d] to” saleof subsidiary's assets and upstreaming ofsales proceeds to debtors, where creditor,

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whose claim was small in comparison tothe $5 billion in claims against jointlyadministered estates, had already receivedover 1,200 pages of information responsiveto requests, where costs of assembling thisinformation might exceed amount of its claim,and where production was not necessaryto pursuit of its claim, which had beenallowed, but was sought primarily in aid offraudulent transfer claims that it might wishto assert in Malaysian insolvency proceedingsof subsidiary. Fed. R. Bankr. P. 2004.

Cases that cite this headnote

[7] BankruptcyAdequate protection in general

Unsecured creditors do not have interest inproperty of the estate that merits adequateprotection, and there is no express statutoryrequirement that unsecured creditors receiveadequate protection. 11 U.S.C.A. §§ 362(d)(1),363(e), 364(d)(1)(B).

Cases that cite this headnote

Attorneys and Law Firms

*245 McCARTER & ENGLISH, LLP Counsel for CSILeasing, Inc. and CSI Leasing Malaysia Sdn. Bhd. 245

Park Ave., 27 th Floor New York, New York 10167,Daniel R. Seaman, Esq. Of Counsel

TOGUT, SEGAL & SEGAL LLP Co–Counsel for theDebtors and Debtors-in-Possession One Penn Plaza, Suite3335 New York, New York 10119, Frank A. Oswald, Esq.Brian F. Moore, Esq. Of Counsel

MEMORANDUM DECISION ANDORDER REGARDING APPLICATION

FOR A RULE 2004 EXAMINATION

STUART M. BERNSTEIN, United States BankruptcyJudge:

Applicants CSI Leasing, Inc. (“CSILI”) and CSI LeasingMalaysia Sdn. Bhd. (“CSIM” and, together with CSILI,

“CSI”) seek authorization to examine the Debtorspursuant to Rule 2004 of the Federal Rules of BankruptcyProcedure (“Rule 2004”). The proposed examinationbroadly relates to the sale of assets by a non-Debtor,who owes money to CSI, and the upstreaming of thesales proceeds to the Debtors. The Debtors opposed theapplication, and the Court held a hearing on November17, 2016 and reserved decision. For the reasons thatfollow, the application is denied except to the limitedextent noted below.

BACKGROUND 2

On June 7, 2011, SunEdison Kuching Sdn. Bhd.(“SEK”)—a non-Debtor wholly-owned subsidiary of theDebtor SunEdison Products Singapore Pte. Ltd. (“SEPS”)(Schedule A/B at 23 of 31 (ECF/SEPS Doc. # 5)—entered into an equipment lease with CSIM, whichincorporated an equipment schedule dated July 1, 2011(the “Equipment Lease”). (Application on Presentmentof Creditor CSI Leasing, Inc. for Entry of an OrderPursuant to Fed. R. Bankr. P. 2004 Authorizing andDirecting the Examination of the Debtors, dated Aug. 23,2016 (“Application ”), at ¶ 2 (ECF Doc. # 1048).) SEPSguaranteed the Equipment Lease. (Application at ¶ 3.)SEPS is a direct subsidiary of SunEdison International,Inc., which, in turn, is a direct subsidiary of SunEdison,Inc. (“SUNE”). (See Corporate Ownership Statement ofSunEdison Products Singapore Pte Ltd. at 7 of 18 (ECF/SEPS Doc. # 1).) SEK defaulted on the Equipment Lease,and SEPS defaulted on the guarantee. (Application at ¶4.) As a result, each owes CSI approximately $2.5 million.(Id.)

In March 2016, SEK entered into an asset purchaseagreement (the “APA”) to sell substantially all of its assetsto XiAn *246 LONGi (“LONGi”), a Chinese company,for approximately $63 million. (Id. at ¶ 5.) There is noevidence that any Debtor was a party to the APA. LONGiapparently paid all but $18 million (the “$18 MillionHoldback”) at the closing to SEK, with the balance tobe paid in the future upon the satisfaction of certainconditions. (Id.) In the meantime, SEK transferred thesale proceeds paid at the closing to the Debtors (the“Upstream”), “namely SunEdison, Inc.,” leaving little tono assets in SEK to pay its creditors. (Id. at ¶ 6.) CSI hasexpressed concern that if SEK receives any part of the

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$18 Million Holdback, it will upstream those sums (the“Future Upstreams”) as well. (Id. at ¶ 7.)

Most of the Debtors, including SEPS and SUNE,commenced chapter 11 cases on April 21, 2016. InSeptember 2016, CSI filed Proof of Claim No. 2879against SEPS in the amount of $2,496,611.09, andProof of Claim No. 2234 against SUNE in the amountof $51,144.47. The Debtors have reviewed the claimsand determined that they should be allowed. (Debtors'Objection to the Application of CSI Leasing, Inc. for Entryof an Order Pursuant to Fed. R. Bankr. P. 2004 Authorizingand Directing the Examination of the Debtors, dated Nov.10, 2016 (“Debtors' Objection”), at ¶ 13 (ECF Doc. #1577).)

The actual value of CSI's claims is, however, uncertain.During earlier proceedings in connection with the Court'smotion relating to the appointment of an official equitycommittee, the Court found that the Debtors owed $4.2billion in prepetition secured and unsecured debt, and itscontingent debt could exceed an additional $1.2 billion.In re SunEdison, Inc., 556 B.R. 94, 101 (Bankr. S.D.N.Y.2016). Furthermore, the Debtors were authorized toborrow $300 million after the petition date. Id. at 101n.7. In contrast, the projected value of its assets was nomore than $1.5 billion, net of the debtor-in-possessionfinancing. Id. at 101. The Court concluded that theDebtors appeared to be hopelessly insolvent, and declinedto appoint an official equity committee. Id. at 107. It lookslike CSI's potential distribution in the chapter 11 cases, ifany, will be only a small percentage of the face amount ofits claims.

One other point is the status of SEK. The Debtors haveinformed the Court that SEK is currently the subjectof a Malaysian insolvency proceeding, and a liquidatorwas appointed on October 4, 2016. (Debtors' Objectionat 4.) According to CSI, it may be the largest creditorin that proceeding. (See Memorandum of Law in FurtherSupport of the Application [Docket Document No. 1048] ofCreditor CSI Leasing, Inc. for Entry of an Order Pursuantto Fed. R. Bankr. P. 2004 Authorizing and Directingthe Examination of the Debtors, dated Nov. 14, 2016(“Supplemental Memorandum”), at ¶ 5 (ECF Doc. #1596).) The parties have not informed the Court whetherthe Malaysian liquidator has standing and intends topursue the transfer by SEK to the Debtors.

A. CSI's Rule 2004 ApplicationAfter most of the Debtors, including SEPS andSUNE, had commenced chapter 11 cases, CSI filed theApplication seeking Rule 2004 discovery. The Applicationincluded sixteen paragraphs requesting the production of“documents,” and in most cases “communications” aswell, relating to the subject matter of the specific request

(the “Requests”). 3 I have renumbered the *247 Requestsand placed them into the following three categories:

i. Documents and Communications relating to the Upstreamand Future Upstreams

1. All documents “that relate to the Upstream.”

2. All documents “that relate to the Future Upstream.”

3. “All documents and communications related to theDebtor's anticipated receipt of the Future Upstream.”

4. “All documents and communications related to theDebtor's intended uses of the Upstreamed Funds as partof the Debtor's plan of reorganization.”

5. “All documents and communications related to theDebtor's intended uses of the Future Upstreams as partof the Debtor's plan of reorganization.”

6. “All documents and communications reflecting anyopinion or analysis that the Upstream or FutureUpstreams did aid or will aid the Debtors' ability toreorganize.”

ii. Documents and Communications relating generally to theDebtors' Chapter 11 Cases

7. “All documents and communications related to thesources of funds which the Debtor may use to fund theDebtor's plan of reorganization.”

8. “All documents and communications related to theprojected income and expenses of the Debtors duringthis bankruptcy proceeding.”

9. “All documents and communications upon which theDebtors may rely to argue that the interests of CSI areadequately protected.”

iii. Documents and Communications relating to SEK,the Malaysian proceeding and CSI's recovery in thatproceeding

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10. Documents “that relate to the APA.”

11. “All documents related to why SEK did not seekbankruptcy protection via the SunEdison Bankruptcy.”

12. “All documents related to SEK directors, officers,or employees who went *248 to work for (or consultfor) LONGi after (or around the time that) the APAwas entered into.”

13. “All documents and communications reflectingany lawsuits, proceedings, mediations, or actions that[the Debtors] are aware of relating to SEK's debts tocreditors in Malaysia or elsewhere.”

14. “All documents and communications relating to anydirection or consultation the Debtors gave to SEK forthe time period of the one-year period prior to the APAup to the present.”

15. “All documents and communications reflectingany claims, demand letters, lawsuits, proceedings,mediations, or actions that [the Debtors] are aware ofwhere it is asserted or referenced that the Upstream orFuture Upstreams damaged or will damage a creditor'sability to recovery from SEK or SEPS or any of theDebtors.”

16. “All documents and communications reflecting anylawsuits, proceedings, mediations, or actions that [theDebtors] are aware of relating to SEPS's debts tocreditors in Malaysia or elsewhere.”

(Requests, Ex. A, Documents Requested.)

B. The Informal DiscoveryAfter CSI filed the Application, the Debtors beganproviding responsive information on a rolling basisand the parties agreed to adjourn the hearing on theApplication to a later date. (Debtors' Objection at 3.) OnSeptember 29, 2016, the Court entered an order furtherauthorizing and directing the Debtors to produce toCSI “the APA and certain related supply agreements,and the closing binder for the same.” (Order Authorizingand Directing the Initial Production of Documents of theDebtors, dated Sep. 29, 2016 (the “Initial Order ”), Ex.A, at 5 (ECF Doc. # 1284).) The Initial Order wasentered without prejudice to CSI's rights to seek additionalrelief demanded in the Application, (Initial Order at 2),and the Application was subsequently set for hearing on

November 17, 2016. (Notice of Rescheduling of Applicationon Presentment of Creditor CSI Leasing, Inc. for Entry ofan Order Pursuant to Fed. R. Bankr. P. 2004 Authorizingand Directing the Examination of the Debtors, dated Oct.13, 2016 (ECF Doc. # 1385).)

C. Subsequent Proceedings Relating to CSI's 2004ApplicationThe informal discovery efforts did not satisfy CSI.Consequently, the Debtors filed a formal objection to theApplication, characterizing it as premature, overly broad,speculative and unduly burdensome. (Debtors' Objectionat 2, ¶¶ 8–9.) The Debtors argue that they have agreed toallow CSI's claims, and CSI does not need the informationto frame its claims. (Id. at ¶ 13.) In addition, authorizingdiscovery at this point in these chapter 11 cases mightset an unwieldy precedent and open the floodgates forsimilar requests by other claimants. (Debtors' Objectionat ¶ 8.) Furthermore, CSI's requests exceeded the scopeof Rule 2004, (id. at ¶ 10), CSI had not demonstratedgood cause, (Debtors' Objection at ¶¶ 12–13), the Debtorshad already provided information about the Malaysianproceeding and CSI should make any further requestsin that proceeding, (id, at ¶ 14), and CSI could getinformation relating to the Debtors' financial history byreviewing the Debtors' publicly available Schedules ofAssets and Liabilities, Statement of Financial Affairs andMonthly Operating Reports. (Debtors' Objection at ¶¶ 11,15.)

CSI responded largely reiterating its arguments madein the Application. In contrast to the Debtors'characterization that the Request was overly broad andspeculative, CSI submitted that they were “narrowly*249 tailored.” (Supplemental Memorandum at ¶ 10

(footnote omitted).) CSI also acknowledged based uponits own due diligence that the Future Upstreams wouldprobably never be tendered, (id. at ¶ 6), and characterizedtheir requests simply as “directing the Debtors to provideoral testimony and produce documents related to theUpstream.” (Id. at ¶ 8 (footnotes omitted).) CSI furtherargued that its requests would not cause undue cost ordisruption to the Debtors because it was not seekingdiscovery of any documents that the Debtors had alreadyprovided or documents that did not exist. (Id. at ¶ 10.)Furthermore, good cause existed because the Rule 2004examination was necessary to effectively enforce theirrights in the United States and in Malaysia. (Id. at ¶ 12.)Finally, CSI disputed the Debtors' claim that it should

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first seek the documents and communications from theMalaysian liquidator. The Debtors had already admittedthey had responsive documents, and the possible existenceof such documents elsewhere did not relieve the Debtorsof their obligations under Rule 2004. (Id. at ¶ 14.)

DISCUSSION

[1] [2] Rule 2004 provides in relevant part that the Courtmay authorize the examination of any entity relating“to the acts, conduct, or property or to the liabilitiesand financial condition of the debtor, or to any matterwhich may affect the administration of the debtor'sestate.” FED. R. BANKR. P. 2004(b). In chapter 11cases, the examination may extend to matters relating“to the operation of any business and the desirabilityof its continuance, the source of any money or propertyacquired or to be acquired by the debtor for purposesof consummating a plan and the consideration given oroffered therefor, and any other matter relevant to thecase or to the formulation of a plan.” Id. The partyseeking Rule 2004 discovery has the burden to show goodcause for the examination it seeks, and relief lies withinthe sound discretion of the Bankruptcy Court. Picardv. Marshall (In re Bernard L. Madoff Inv. Secs. LLC ),Adv. Pro. No. 08–01789, 2014 WL 5486279, at *2 (Bankr.S.D.N.Y. Oct. 30, 2014); see In re Bd. of Dirs. of HopewellInt'l Ins. Ltd., 258 B.R. 580, 587 (Bankr. S.D.N.Y. 2001)(Rule 2004 gives the Court “significant” discretion).

[3] [4] [5] A party seeking to conduct a Rule 2004examination typically shows good cause by establishingthat the proposed examination “ ‘is necessary to establishthe claim of the party seeking the examination, or ...denial of such request would cause the examiner unduehardship or injustice.’ ” In re Metiom, Inc., 318 B.R.263, 268 (S.D.N.Y. 2004) (quoting In re Dinubilo, 177B.R. 932, 943 (E.D. Cal. 1993)); accord In re AOGEntm't, Inc., 558 B.R. 98, 109 (Bankr. S.D.N.Y. 2016);In re Drexel Burnham Lambert Grp., Inc., 123 B.R. 702,712 (Bankr. S.D.N.Y. 1991). In evaluating a requestto conduct a Rule 2004 examination, the Court must“balance the competing interests of the parties, weighingthe relevance of and necessity of the information soughtby examination. That documents meet the requirement ofrelevance does not alone demonstrate that there is goodcause for requiring their production.” Drexel Burnham,123 B.R. at 712; accord In re Coffee Cupboard, Inc., 128

B.R. 509, 514 (Bankr. E.D.N.Y. 1991); In re Fearn, 96B.R. 135, 138 (Bankr. S.D. Ohio 1989) (“While the scopeof Rule 2004 examination is very broad, it is not limitless.The examination should not be so broad as to be moredisruptive and costly to the party sought to be examinedthan beneficial to the party seeking discovery.”)

In the past, courts have referred to the expansive readingof Rule 2004 comparing it to a “fishing expedition,”*250 Drexel Burnham Lambert Grp., Inc., 123 B.R.

at 711, a concept generally attributed to an old casethat described the examination of the bankrupt asa “fishing examination.” In re Foerst, 93 F. 190,191 (S.D.N.Y. 1899). But the cost of compliance hasincreased substantially since then. The era of paperdiscovery in relatively small cases has given way to thediscovery not only of paper but also of vast amounts ofelectronically stored information (“ESI”), possibly storedon outdated systems, on numerous personal computersand servers located throughout the world. SHIRA A.SCHEINDLIN, MOORE'S FEDERAL PRACTICE, E–DISCOVERY: THE NEWLY AMENDED FEDERALRULES OF CIVIL PROCEDURE 3 (2006). Discoveryhas become an increasingly expensive aspect of civillitigation.

The proliferation of information and the costs associatedwith retrieving, reviewing and producing discovery incivil litigation have led to the 2015 amendments to theFederal Rules of Civil Procedure which emphasize theconcept of proportionality. Under Rule 26, the scope ofdiscovery extends to any matter relevant to a party's claimor defense and “proportional to the needs of the case,considering the importance of the issues at stake in theaction, the amount in controversy, the parties' relativeaccess to relevant information, the parties' resources, theimportance of the discovery in resolving the issues, andwhether the burden or expense of the proposed discoveryoutweighs its likely benefit.” FED. R. CIV. P. 26(b)(1).In addition, a party need not provide discovery of ESIfrom sources “that the party identifies as not reasonablyaccessible because of undue burden or cost,” but the partyfrom whom discovery is sought has the burden of showing“that the information is not reasonably accessible becauseof undue burden or cost,” and even if it meets that burden,“the court may nonetheless order discovery from suchsources if the requesting party shows good cause.” Fed. R.Civ. P. 26(b)(2)(B).

In re SunEdison, Inc., 562 B.R. 243 (2017)

63 Bankr.Ct.Dec. 163

© 2017 Thomson Reuters. No claim to original U.S. Government Works. 6

[6] Rule 2004 has not been similarly amended but thespirit of proportionality is consistent with the historicconcerns regarding the burden on the producing party andis relevant to the determination of cause. The Requestsprovide a good illustration. CSI's claims, while significantin face value, are small when viewed in the context ofchapter 11 cases involving over $5 billion in debt withlittle prospect of anything more than a small recoveryfor unsecured creditors. By the November 17, 2016hearing, the Debtors had already produced over 1,200pages of information responsive to Requests as well assupplemental requests not included in the Application.(Debtors' Objection at 3–4.) These documents covered,among other things, the APA, (id. at 4; Initial Order), information showing the flow of funds, (Tr. at 56:6–13), and the Malaysian insolvency proceeding. (Debtors'Objection at ¶ 14.) CSI wants more, but the cost ofretrieving, reviewing and producing “all documents and

communications” relating to 4 each of the sixteen specificrequests may exceed CSI's distribution in the Debtors'cases, and some of the requests could be made byevery creditor and equity interest holder in these cases.Moreover, the Debtors have determined to allow CSI'stwo claims, and the additional discovery does not appearto be necessary to resolve any material *251 issues inthese chapter 11 cases between CSI and the Debtors.

Turning to the Requests, CSI has not established cause formost of the information it seeks. The cause it is required todemonstrate must relate to these cases. Although many ofthe requests are ostensibly relevant to the subject matterof the Debtors' cases, the primary focus of the Applicationis the need for information to use in the Malaysianinsolvency proceeding.

CSI makes no secret of this purpose. CSI has impliedthat the Upstream was a fraudulent transfer by SEK. TheApplication argued that the Upstream left “little to noassets and little to no money to pay the just claims ofSEK's creditors,” (Application at ¶ 6), and the Debtorshave information and knowledge regarding the Upstream,the $18 Million Holdback, and “other potential futureexpectant interests from SEK and/or LONGi.” (Id. at ¶7.) Most telling, CSI argued that it needed the Rule 2004discovery immediately to support its request for relief inthe Malaysian insolvency proceeding:

It also appears the Debtorsare pursuing certain courses that

are calculated, at least in part,to circumvent existing obligationsand defeat Malaysian creditors(including but not limited to CSI)that may have rights to proceedsunder the APA or otherwise. Withpossible legal actions that CSI couldtake in Malaysia (including, but notlimited to, injunctive relief), andwith three months having transpiredsince CSI's Application was filedwith this Court, it is imperativethat CSI immediately obtain theinformation it has requested in theApplication and without furtherdelay so that it may effectivelyenforce its rights here and inMalaysia.

(Supplemental Memorandum at ¶ 12 (emphasis added).)

CSI confirmed the reason why it needed the informationat oral argument. In response to the Court's questionon that point, CSI's counsel stated “[w]e need discoverybecause of the related claims that exist in this caserelated to our Malaysian enterprise.” (Tr. at 49:1–3.)He also stated that the Upstream “directly affects ourclaims and rights in Malaysia,” (Tr. at 49:24–50:1), and“a debtor was used as a conduit to commit the overalltransaction, which denied all the Malaysian creditors anyrecovery from SEK nondebtor and SPS debtor.” (Tr.at 53:13–16.) I do not mean to minimize the possiblegrievance of or the potential remedies available to SEK'screditors and/or the Malaysian liquidator as a result of theUpstream, although I draw no conclusions. Nevertheless,the party seeking Rule 2004 discovery must show a need orundue hardship relating to the bankruptcy case in whichthe information is sought, not in some other, foreignproceeding.

While the Upstream may be germane to these casesbecause it arguably stripped SEPS of assets to pay CSI's

claim in that case, 5 the extent of the discovery that CSIdemands pertaining to the Upstream and other requestswithin the scope of Rule 2004 is disproportionate. Partof the problem may be CSI's misperception of its ownRequests. It has described the Requests as “narrowlytailored,” (Supplemental Memorandum at ¶ 10), and“surgical,” (Tr. at 54:24), but they are quite the opposite.

In re SunEdison, Inc., 562 B.R. 243 (2017)

63 Bankr.Ct.Dec. 163

© 2017 Thomson Reuters. No claim to original U.S. Government Works. 7

First, CSI has not placed reasonable limits on the sourcesor types of information that the Debtors must searchfor and retrieve. *252 The Requests generally ask for“all documents and communications” that “relate to” thesubject matter of the specific request. The Court has notedthe breadth of these terms. CSI will accept nothing less.It placed only two limits on the Debtors' duty to disclosethat are meaningless: the Debtors do not have to produceany documents and communications they have alreadyproduced, and they don't have to produce any documentsand communications that don't exist, at least while theydon't exist. (Supplemental Memorandum at ¶ 10.) But forthese limits, CSI insists that the Debtors must produceeverything.

CSI has not articulated a rationale for compelling theproduction of all documents and communications relatingto the Upstream. The Debtors have not disputed theUpstream, and it should be sufficient for CSI if theDebtors produce information showing how the moneymoved from SEK to SEPS and beyond. The Debtorsshould not be required to search every document, emailand byte of data located on the servers and computers of

its far-flung affiliates. 6

Second, other requests are premature, unnecessary oroverly broad. For example, CSI has acknowledged thatFuture Upstreams are unlikely. Nevertheless, it insists oncompliance with three separate requests devoted entirelyto Future Upstreams and a fourth request that includesboth Upstreams and Future Upstreams. CSI also seeksdiscovery of all “documents and communications” relatedto (1) the possible sources of plan funding, (2) the Debtors'projected income and expenses and (3) documents andcommunications the Debtors “may” use “to argue thatthe interests of CSI are adequately protected.” Given thebroad duty to produce documents and communications“relating to” possible sources of plan funding andthe Debtors' projected income and expenses, these two

requests could conceivably cover every document andcommunication that exists. Moreover, the request for planfunding documents is premature; there is no plan and,as far as I can tell, no funding. In any event, this is thetype of information that would be disclosed in a disclosurestatement.

[7] The request relating to the adequate protection ofCSI's interests is the most perplexing. To begin with, CSIhas not requested adequate protection. More importantly,it is not entitled to adequate protection. Adequateprotection must be provided to protect against the declinein value to a non-debtor's interest in property of the estateresulting from the imposition of the automatic stay, 11U.S.C. § 362(d)(1), the use, sale or lease of that property,11 U.S.C. 363(e), or the granting of a priming lien onthat property to secure post-petition financing. 11 U.S.C. §364(d)(1)(B); see also 11 U.S.C. § 361; In re Garland Corp.,6 B.R. 456, 462 ( BAP 1st Cir. 1980) (Cyr, J.) Unsecuredcreditors like CSI do not have an interest in property ofthe estate that merits adequate protection, and there isno express statutory requirement that unsecured creditorsreceive adequate protection. Garland Corp., 6 B.R. at 462;In re R.F. Cunningham & Co., 355 B.R. 408, 412 (Bankr.E.D.N.Y. 2006) (“There is no statutory requirement thatunsecured creditors receive adequate protection, and thelack of adequate protection does not entitle an unsecuredcreditor to relief from the stay.”).

Accordingly, the Application is denied except to theextent that the Debtors are directed to provide sufficientinformation *253 to identify the flow of funds thatcomprise the Upstream.

So ordered.

All Citations

562 B.R. 243, 63 Bankr.Ct.Dec. 163

Footnotes1 The Debtors in these chapter 11 cases include SunEdison, Inc.; SunEdison DG, LLC; SUNE Wind Holdings, Inc.; SUNE

Hawaii Solar Holdings, LLC; First Wind Solar Portfolio, LLC; First Wind California Holdings, LLC; SunEdison HoldingsCorporation; SunEdison Utility Holdings, Inc.; SunEdison International, Inc.; SUNE ML 1, LLC; MEMC Pasadena, Inc.;Solaicx; SunEdison Contracting, LLC; NVT, LLC; NVT Licenses, LLC; Team–Solar, Inc.; SunEdison Canada, LLC;Enflex Corporation; Fotowatio Renewable Ventures, Inc.; Silver Ridge Power Holdings, LLC; SunEdison International,LLC; Sun Edison LLC; SunEdison Products Singapore Pte. Ltd.; SunEdison Residential Services, LLC; PVT Solar, Inc.;SEV Merger Sub Inc.; Sunflower Renewable Holdings 1, LLC; Blue Sky West Capital, LLC; First Wind Oakfield Portfolio,LLC; First Wind Panhandle Holdings III, LLC; DSP Renewables, LLC; Hancock Renewables Holdings, LLC; EverStream

In re SunEdison, Inc., 562 B.R. 243 (2017)

63 Bankr.Ct.Dec. 163

© 2017 Thomson Reuters. No claim to original U.S. Government Works. 8

Holdco Fund I, LLC; Buckthorn Renewables Holdings, LLC; Greenmountain Wind Holdings, LLC; Rattlesnake FlatHoldings, LLC; Somerset Wind Holdings, LLC; SunE Waiawa Holdings, LLC; SunE MN Development, LLC; SunE MNDevelopment Holdings, LLC; SunE Minnesota Holdings, LLC and TerraForm Private Holdings, LLC.

2 The following conventions are used in citing to the record. “ECF Doc. # –––” refers to documents filed on the docket ofthe main chapter 11 case, In re SunEdison, Inc., et al., case no. 16–10992. “ECF/SEPS Doc. # –––” refers to documentsfiled in the chapter 11 case, In re SunEdison Products Singapore PTE Ltd., case no. 16–11014. “# of #” refers to thepage number and total number of pages placed by the CM/ECF filing system at the top of every page of a filed document.“Tr.” refers to the transcript of the hearing held in the main chapter 11 case on November 17, 2016 (ECF Doc. # 1646).

3 The Requests include broad definitions of “documents and “communications.” “ ‘Document’ or ‘documents' means anywriting or record of any type or description, including but not limited to the original, any non-identical copy or any draft,regardless of origin or location, of any paper, electronically-stored file, book, pamphlet, computer printout, newspaper,magazine, periodical, letter, memorandum, telegram, report, record, study, inter-office or intra-office communication,handwritten or other note, diary, invoice, purchase order, bill of lading, computer print-out, transcript of telephoneconversations and any other retrievable data, working paper, chart, deed, survey, notes, map, graph, index, disc, datasheet or data processing card, or any other written, recorded, transcribed, punched, taped, magnetically recorded,filmed or graphic matter, however produced or reproduced to which You have, or have had, access.” (Requests, Ex. A,Definitions and Instructions at ¶ 13.) ‘Communication’ means any transfer of information, oral or written, be it in the formof facts, ideas, inquiries, opinions, or otherwise, by any means, at any time or place, under any circumstances, and is notlimited to transfers between persons, but includes other transfers, such as records and memoranda to the file.” (Id. at ¶14.) I use the words “documents' and “communications” as a short hand to refer to all of the things in the definitions.

The Requests also impose certain onerous obligations with respect to the production of documents. For example, the“Debtors have a duty to search for responsive documents and things in all media and sources in their possession,custody or control where paper or electronic files are kept or stored, including floppy disks, hard drives on or for personalcomputers, computer servers, mainframe storage tapes or disks, archive facilities and backup facilities,” (id. at ¶ 7), theyare deemed “to be in control of a document if you have the right to secure the document or a copy thereof from anotherperson having actual possession thereof,” and “shall identify and provide the location of all responsive documents ofwhich you are aware but which are not in your custody, possession or control.” (Id. at ¶ 6.)

4 “The term ‘relating to’ (including any variant thereof), includes referring to, alluding to, responding to, pertaining to,concerning, connected with, commenting on or in respect of, analyzing, touching upon, constituting and being, andis not limited to contemporaneous events, actions, communications or documents. (Requests, Ex. A, Definitions andInstructions at ¶ 15.)

5 On the other hand, CSI implies that the sale proceeds were fraudulently transferred and should be recovered for thebenefit of SEK's creditors. This is inconsistent with the argument that the proceeds could or should be used to satisfyCSI's claims in these cases.

6 Nothing herein relieves the Debtors of the duty to produce the APA-related documents that were the subject of the earlierorder described above.

End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works.

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Proportionality and E-Discovery: Managing and Navigating E-Discovery in Inherently Disproportionate Adversary Matters

Date Created: Thu, 09/07/2017 - 16:50

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The Federal Rules of Civil Procedure were amended in 2015 and explicitly adopted the concept of proportionality:

Parties may obtain discovery regarding any non-privileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable. [1]

The Advisory Committee notes to the 2015 amendments state that the intent was to restore the proportionality calculation to the Rule and that “[t]he parties and the court have a collective responsibility to consider the proportionality of all discovery and consider it in resolving discovery disputes.” [2] It was not intended to offer a party opposing discovery a new shield, but rather to have parties consider the scope of discovery and the factors of proportionality early in the case, particularly in light of the ever-growing importance of e-discovery and growing quantity of electronically stored information (ESI). [3] “The proliferation of information and the costs associated with retrieving, reviewing and producing discovery in civil litigation have led to the 2015 amendments to the Federal Rules of Civil Procedure, which emphasize the concept of proportionality.” [4]

The Advisory Committee acknowledged that there will be proceedings where one party has little discoverable information while another party might have large quantities of information, including ESI, potentially leading to significant e-discovery. [5] A notion also recognized by courts:

The amended rules add “new text to provide explicit focus” for cases involving what is often called “information asymmetry” — situations in which one party has ready access to “vast amounts of information” and the other party has very little.… The party asserting [objections to discovery] bears the burden of showing their applicability.

Satisfaction of that burden requires a specific, detailed showing of how a request is burdensome. A mere statement by a party that a request is “overly broad and unduly burdensome” is not adequate to voice a successful objection. [6]

The Advisory Committee’s intention was to encourage adversaries to address discovery early and in an efficient and productive manner, rather than resort to court intervention and unnecessary discovery disputes.

Disproportionate discovery burdens can be commonplace in adversary proceedings involving a trustee or a plan trustee. Often, trustees receive very little documentation from debtors, including ESI, but need to effectively gather this information either for pursuit of estate causes of action or for other general investigative or due diligence purposes. Trustees may also be forced to take additional steps to gather documentation and ESI from an opposing party. In addition, during litigation, trustees may be subject to discovery requests from third parties or others but frequently have little to no information available to produce. Nearly two years since the adoption of the 2015 amendments, courts have highlighted the need for cooperation [7] and other tools to help parties navigate discovery with proportionality factors in mind.

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Disproportionate discovery requires counsel to take proactive steps to effectively manage what can easily become an unmanageable task and one prone to unnecessary disputes. As early as drafting a complaint or answering a complaint, or in the process of seeking Rule 2004 discovery, it is helpful to develop key factual and legal areas where discovery is needed and likely sources of discovery. Taking a shotgun approach to discovery at the outset is not only counterproductive to the concept of proportionality, it can lead to burdensome document and ESI production for both sides.

The parties are likely in a position to begin discussing discovery relatively early in an adversary proceeding or a Rule 2004 application for discovery, and at a minimum, no later than the Rule 26(f) meet and confer, parties must address discovery, including ESI. [8] To facilitate effective discovery and comply with meet-and-confer obligations, topics at a meet-and-confer should include:

areas of discovery;

the location and preservation of hard-copy documents and ESI;

the quantity and format of ESI;

the prospect of phased discovery;

custodians of discoverable information;

the method of collecting and preserving ESI;

the use of search terms and protocols;

the use of technology for collection and production;

the format of production; and

the existence and nature of privileged documents. [9]

Early, detailed discussion and agreement on the above areas will enable better-written discovery requests that are more in line with all parties’ expectations.

Discovery Is an Ongoing Process

Discovery, particularly involving large quantities of ESI, is best viewed as an iterative process; therefore, continuing cooperation among parties is essential. Not only is it unlikely that a single meet-and-confer will address all issues when the discovery is disproportionate, the use of technology tools is essential in creating effective search, production and review of large quantities of ESI. [10] Technology tools, such as search terms, date parameters and search protocols, which combine search terms using boolean logic, are key to eliminating nonresponsive documents from production and devising an efficient review set and review protocol.

In collection and production, parties should endeavor to use technology to reduce nonresponsive documents. Similarly, when reviewing large quantities of ESI, it should not be assumed that every document must be reviewed. When possible, parties should use technology to hone in on key documents for depositions, motions for summary judgment, and the theory of the case. These steps, by both parties, ultimately reduce the time and cost of exceedingly expensive e-discovery. Most importantly, continued cooperation will reduce the need for court intervention, which increases costs and causes unnecessary delay.

[1] Fed. R. Civ. P. 26(b)(1) (emphasis added); see also Fed. R. Bankr. P. 7026 (adopting this rule for adversary proceedings). “Rule 2004 has not been similarly amended but the spirit of proportionality is consistent with the historic concerns regarding the burden on the producing party and is relevant to the determination of cause.” In re SunEdison Inc., 562 B.R. 243, 250 (Bankr. S.D.N.Y. 2017).

[2] Fed. R. Civ. P. 26 advisory committee’s note.

[3] Id.

[4] In re SunEdison Inc., 562 B.R. 243, 250 (Bankr. S.D.N.Y. 2017).

[5] See Fed. R. Civ. P. 26 Advisory Committee’s note.

[6] In re Adkins Supply Inc., 555 B.R. 579, 590 (Bankr. N.D. Tex. 2016) (citations omitted).

[7] Salazar v. McDonalds Corp., Case No. 14-cv-02096-RS (MEJ), 2016 WL 736213, at *2 (N.D. Cal. Feb. 25, 2016) (“[T]he revised rule places a shared responsibility on all the parties to consider the factors bearing on proportionality before propounding discovery requests, issuing responses and objections, or raising discovery disputes before the courts.”).

[8] Cartel Asset Mgmt. v. Ocwen Fin. Corp., No. 01-cv-01644-REB-CBS, 2010 WL 502721, at *13 (D. Colo. Feb. 8, 2010) (“[c]ivil litigation, particularly with the advent of expansive e-discovery, has simply become too expensive and too protracted to permit superficial compliance with the ‘meet and confer’ requirement....”).

[9] See, e.g., Fed. R. Civ. P. 26(f)(3).

[10] See Jason R. Baron & Edward C. Wolfe, A Nutshell on Negotiating E-Discovery Search Protocols, 11 Sedona Conf. J. 229, 234 (2010) (discussing the process of using search protocols at multiple stages to manage ESI).

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Arizona Rule 26(b)(1)’s Proportionality Standard

The Arizona Supreme Court announced new changes to the Arizona Rules of Civil

Procedure that will become effective on July 1, 2018. Included in your materials are

excerpts from the Order amending the Rules, which includes a black-lined document

showing the changes being made. The changes take up 140+ pages, so only the portions

pertaining to discovery rules are included herein.

Of particular interest within the Rule changes are:

• Differentiated case-management providing for case tiering and narrowed

discovery limits for less complicated cases;

• Expedited procedures for resolving discovery and disclosure disputes;

• Revised rules regarding preservation, disclosure, and discovery of

electronically stored information (ESI);

• Changes to better protect non-parties from unduly burdensome requests for

information via civil subpoenas; and

• New procedures to resolve disputes about the duties of parties or non-parties to

preserve ESI.

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Local Bankruptcy Rule 9013-1

A. Text of Rule:

(e) Discovery Disputes. No motion concerning discovery disputes will be considered unless a statement of the moving party or its counsel, if represented, is attached certifying that after personal consultation and sincere efforts to do so, the parties have been unable to resolve the matter.

(f) Motions to Compel. When a motion for an order compelling discovery is brought, in addition to the requirements set forth in paragraph (e) above, the moving party shall set forth the following in separate, distinct, numbered paragraphs:

(1) The questions propounded, the interrogatory submitted, the designation requested or the inspection requested;

(2) The answer, designation or response received; and

(3) The reason(s) why said answer, designation or response is deficient.

The foregoing requirements shall not apply where there has been a complete failure to respond to a discovery request.

L.R. 9013-1(e)-(f) (2017) (bold emphasis added).

B. Requirements for Motion to Compel

Two elements are required for valid motion to compel: (1) Certification; and (2) Performance. Certification of Personal Consultation and Sincere Efforts to Resolve the Discovery Dispute. Statement of the Moving Party via affidavit, declaration or certification signed under penalty of perjury.

1. Personal Consultation.

"Personal consultation requires either face-to-face communication or telephone communication. Letters, faxes and e-mails are insufficient." Hart v. Agnos, available at 2008 WL 2008966, at **7-8 (D. Ariz., April 25, 2008); Robinson v. Hall, No. CV-12-166-PHX-FJM (LOA), 2013 U.S. Dist. LEXIS 28786, at *7-8 (D. Ariz. Mar. 1, 2013).

"Personal consultation" means a face to face meeting or phone discussion, in addition to emails, voice-mails, and texts. http://www.azb.uscourts.gov/content/judge-madeleine-c-wanslee#10

2. Sincere Effort.

The parties must present to each other the merits of their respective positions with the same candor, specificity, and support during informal negotiations as during the briefing of discovery motions. Only after all the cards have been laid on the table, and a party has

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meaningfully assessed the relative strengths and weaknesses of its position in light of all available information, can there be a "sincere effort" to resolve the matter. Further, to ensure that the parties have made every effort to reach a "satisfactory resolution," judicial intervention should be considered appropriate only when (1) informal negotiations have reached an impasse on the substantive issue in dispute, or (2) one party has acted in bad faith, either by refusing to engage in negotiations altogether or by refusing to provide specific support for its claims of privilege. See Crown Cork & Seal, Co., Inc. v. Chemed Corp., 101 F.R.D. 105, 106-7 (E.D. Pa. 1984) (discovery disputes should not be referred to the court unless such serious differences exist between counsel that further efforts at negotiation are pointless, or a court ruling is required on a disputed issue of law). Nev. Power Co. v. Monsanto Power Co., 151 F.R.D. 118, 120 (D. Nev. 1993).

3. Contents of Certification. The certification must accurately and specifically convey to the court who, where, how, and when the respective parties attempted to personally resolve the discovery dispute. Triad Commer. Captive Co. v. Carmel (In re GTI Capital Holdings, L.L.C.), No. AZ-09-1053-JuMkD, 2009 Bankr. LEXIS 4539, at *1 (U.S. B.A.P. 9th Cir. Aug. 20, 2009).

i. Practical Tips Based on Prior Experience.

a. Specify the discovery requested that was not provided, including how and when the discovery was requested (e.g. Order 2004 exam, subpoena, requests for admission).

b. Specify when discovery was due. c. Specify why the discovery is relevant. If anything is

asserted to be overbroad, attempt to narrow to the extent possible.

d. Give a reasonable time to respond/resolve. Specify the deadline for compliance.

ii. Performance. This component also has two elements. The moving party

performs, according to the federal rule, by certifying that he or she has (1) in good faith (2) conferred or attempted to confer. Each of these two subcomponents must be manifested by the facts of a particular case in order for a certification to have efficacy and for the discovery motion to be considered. A moving party must include more than a cursory recitation that counsel have been unable to resolve the matter. Triad Commer. Captive Co. v. Carmel (In re GTI Capital Holdings, L.L.C.), No. AZ-09-1053-JuMkD, 2009 Bankr. LEXIS 4539, at *1 (U.S. B.A.P. 9th Cir. Aug. 20, 2009).

4. Purpose of the Rule. Purpose of Bankr. D. Ariz. R. 9013-1(e) is to lessen the burden on the court and reduce the unnecessary expenditure of resources by litigants, through promotion of informal, extrajudicial resolution of discovery disputes. Triad Commer. Captive Co. v. Carmel (In re GTI Capital Holdings,

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L.L.C.), No. AZ-09-1053-JuMkD, 2009 Bankr. LEXIS 4539, at *1 (U.S. B.A.P. 9th Cir. Aug. 20, 2009).

5. Review Judge’s Procedures pages for additional requirements.

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Judges' Procedures Pages

(as of October 9, 2017)

I. Judge Ballinger:

11. DISCOVERY

Very rarely should discovery disputes require court intervention, if the parties keep in mind the court's philosophy.

With respect to production of materials, in most cases the only successful objections will be directed towards issues of confidentiality (privileges, protection of trade secrets, etc.). Relevance objections will almost always be overruled. Objections based upon a production request being burdensome will be seriously considered. Seasoned counsel will almost always be able to predict the court's ruling in these instances.

When a discovery dispute arises, the court requires, as a prerequisite to filing a motion in accordance with Local Rule 9013-1, that the party requesting relief first file a Preliminary Request. Such Preliminary Request shall not exceed three pages in length. In addition to providing a brief description of the discovery dispute, the Preliminary Request shall confirm:

That the parties have conferred in person, not by electronic means, and attempted to resolve their disputes (if a dispute arises as to where to meet, the parties shall call the courtroom deputy and arrange for the use of a court conference room) and that they have not been able to resolve their differences; and

That prior to filing the Preliminary Request, the moving party asked that the courtroom deputy set an expedited joint conference with the judge to resolve the dispute and was told he/she could not be accommodated.

Parties are encouraged to call the court in the event disputes arise during discovery (e.g. during a deposition). Please be aware that the court interprets Fed. R. Civ. P. 30(c)(2) and Fed. R. Bank. P. 7030 to place significant limits on the comments and objections that may be interposed by counsel representing a deponent. Only those objections related to privileges against disclosure or generic statements regarding defects in the form of a question (e.g. "I object to the form of the question.") are permitted. Compliance with these guidelines is mandatory.

http://www.azb.uscourts.gov/content/judge-eddward-p-ballinger-jr

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II. Chief Judge Collins:

8. 2004 EXAMINATIONS AND REQUESTS FOR PRODUCTION OF DOCUMENTS

Motions for 2004 examination is to include the following language: “on a date and time agreeable to the parties or, if upon notice, after not less than 10 days' notice.” 2004 examination with request for production of documents: examination is to be scheduled on a date and time agreeable to the parties or, if upon notice, after not less than 21 days' notice and the request for production of documents is to be scheduled on a date and time agreeable to the parties or, if upon notice, after not less than 14 days' notice.” Request for production of documents: on a date and time agreeable to the parties or, if upon notice, after not less than 14 days' notice.

9. DISCOVERY DISPUTES

The Court refers counsel to local rule 9013-1 motion practice as it relates to discovery disputes. The Court advises should a discovery dispute arise counsel should engage in a meaningful effort to resolve the dispute. Failing which counsel should contact the courtroom deputy who will then schedule a telephonic conference with the Court.

http://www.azb.uscourts.gov/content/chief-judge-daniel-p-collins#8

QB\48593538.1

III. Judge Wanslee:

9. 2004 Examinations and Requests for Production of Documents

Orders granting a 2004 examination are to include the following language: “The examination shall be scheduled on a date and time agreeable to the parties or, if upon notice, after not less than 14 days' notice.” A request for Production of Documents may not request the production of documents by any entity or person on less than 21 days' notice. The parties may stipulate to an earlier or later examination or production, and a party may request the Court shorten the notice period of an examination or production under Local Rule 9013-1. A party subject to a 2004 Order may timely file a Motion for Reconsideration or Motion for Protective Order.

10. Discovery Disputes

COMPLIANCE WITH THE COURT'S DISCOVERY PROCEDURES IS MANDATORY. When a discovery dispute arises, the Court requires, as a prerequisite to filing a motion under Local Rule 9013-1, that the party requesting relief first file a Declaration. Such Declaration shall not exceed three pages in length. In addition to providing a brief description of the discovery dispute, the Declaration shall confirm:

That the parties have conferred in person,* not solely by electronic means, and attempted to resolve their disputes and that they have not been able to resolve their differences (if a dispute arises as to where to meet, the parties must call the Courtroom Deputy and arrange for the use of a court conference room); and

That prior to filing the Declaration, the moving party asked that the Courtroom Deputy set an expedited joint conference with the Judge to resolve the dispute and was told they could not be accommodated.

Parties are encouraged to call the Court in the event disputes arise during discovery (e.g. during a deposition). Please be aware that the Court interprets FRCP 30(c)(2) and FRBP 7030 to place significant limits on the comments and objections that may be interposed by Counsel representing a deponent. Only those objections related to privileges against disclosure or generic statements regarding defects in the form of a question (e.g. "I object to the form of the question.") are permitted.

*NOTE: "Personal consultation" means a face to face meeting or phone discussion, in addition to emails, voice-mails, and texts.

http://www.azb.uscourts.gov/content/judge-madeleine-c-wanslee#9

9

QB\48593538.1

Practical Tips for Resolving Disputes Without Incurring the Wrath of the Court

A. Pick up the phone or meet in person;

B. Identify the dispute and attempt to work through it;

C. Send detailed correspondence in order to narrow the issues, including:

6. Specific discovery/documents requested and not provided, include how

requested, when requested and production deadline; 7. Why the discovery is relevant; 8. If anything is asserted to be overbroad, attempt to narrow to the extent possible; 9. Reference prior efforts to resolve (e.g. when attempted to call; prior

correspondence; responses, if any); 10. Reference the requirements of the Local Rule; 11. Clearly state, “This correspondence is an attempt to resolve this discovery

dispute, pursuant to Local Bankruptcy Rule 9013-1(e);” 12. The correspondence sent should contain the same detail and arguments as the

pleading that will be filed with the Court, if it gets to that point.

D. In the event you must resort to the Court, detail specific facts in your Certification, including:

1. specific discovery/documents requested and not provided 2. dates and times; 3. attach correspondence as an exhibit.

10

QB\48593538.1

Opinions Addressing Local Rule 9013-1(e)

I. In re GTI Capital Holdings, L.L.C., 399 B.R. 247 (Bankr. D. Ariz. 2008). No motion to compel, or similar type of motion dealing with a discovery dispute, is to be filed unless there is a sincere effort by the party filing the motion to resolve the dispute, and the attorney certifies what those sincere efforts were. In re GTI Capital Holdings, L.L.C., 399 B.R. 247, 249 (Bankr. D. Ariz. 2008). Filing a Motion to Compel roughly one day after serving Defendants with discovery requests (and before Defendants had an opportunity to respond to the subpoenas or advise Plaintiffs of any discovery issues) were minimal, and certainly not sincere, efforts by the Plaintiffs to resolve the issues presented. In re GTI Capital Holdings, L.L.C., 399 B.R. 247, 255-56 (Bankr. D. Ariz. 2008).

II. Triad Comm. Captive Co. v. Carmel (In re GTI Capital Holdings, L.L.C.), No. AZ-09-

1053-JuMkD, available at 2009 Bankr. LEXIS 4539, at *1 (9th Cir. B.A.P. Aug. 20, 2009).

Purpose of Bankr. D. Ariz. R. 9013-1(e) is to lessen the burden on the court and reduce the unnecessary expenditure of resources by litigants, through promotion of informal, extrajudicial resolution of discovery disputes. Triad Commer. Captive Co. v. Carmel (In re GTI Capital Holdings, L.L.C.), No. AZ-09-1053-JuMkD, 2009 Bankr. LEXIS 4539, at *1 (U.S. B.A.P. 9th Cir. Aug. 20, 2009). Two components are necessary to constitute a facially valid motion to compel. First is the actual certification document. The certification must accurately and specifically convey to the court who, where, how, and when the respective parties attempted to personally resolve the discovery dispute. Second is the performance, which also has two elements. The moving party performs, according to the federal rule, by certifying that he or she has (1) in good faith (2) conferred or attempted to confer. Each of these two subcomponents must be manifested by the facts of a particular case in order for a certification to have efficacy and for the discovery motion to be considered. A moving party must include more than a cursory recitation that counsel have been unable to resolve the matter. Triad Commer. Captive Co. v. Carmel (In re GTI Capital Holdings, L.L.C.), No. AZ-09-1053-JuMkD, 2009 Bankr. LEXIS 4539, at *1 (U.S. B.A.P. 9th Cir. Aug. 20, 2009).

11

NeutralAs of: September 28, 2017 7:55 PM Z

In re GTI Capital Holdings, L.L.C.

United States Bankruptcy Court for the District of Arizona

November 19, 2008, Decided

In Proceedings Under Chapter 7, Case No. 2:03-bk-07923-SSC, Adv. No. 08-ap-00464, Adv. No. 08-ap-00471 (consolidated)

Reporter399 B.R. 247 *; 2008 Bankr. LEXIS 3505 **

In Re GTI CAPITAL HOLDINGS, L.L.C., an Arizona limited liability company dba ROCKLAND MATERIALS, Debtor. GRANT H. GOODMAN and TERI B. GOODMAN, husband and wife (as Guarantors-Sureties for GTI Capital Holdings, LLC, G.H. Goodman Invest. Co., LLC (Arizona limited liability companies) West Highland Water & Power, LLC (a Delaware limited liability company); Plaintiff,

Subsequent History: Related proceeding at Bombardier Capital, Inc. v. Grant H., 2009 Ariz. App. Unpub. LEXIS 412 (2009)

Related proceeding at Empire Southwest, L.L.C. v. Goodman, 2009 Ariz. App. Unpub. LEXIS 429 (2009)

Core Terms

independent action, discovery, attorneys', motion to compel, settlement agreement, hear, subject matter jurisdiction, fees and costs, Removal, parties, state court, courts, Scheduling, Notice, ancillary jurisdiction, adversary proceeding, discovery dispute, Withdrawal, sanctions, motions, motion for sanctions, denial of motion, documents, subpoenas, withdrew, issues, orders, amend

Case Summary

Procedural PostureThe court considered whether it had jurisdiction to hear two adversary proceedings that were actions removed from state court and a discovery dispute that included motions to compel and for attorney's fees brought by the plaintiffs, guarantors of the debtor's obligations, and defendants, creditors who had entered into a settlement with the debtor and the trustee of the debtor's estate.

Overview

The guarantors' principal argument was that the broad terms

of the release negotiated between the trustee on behalf of the debtor and the creditors effectively released the guarantors from any liability guaranteed by them as to the unpaid debts of the debtor. They filed suit in state court, naming the trustee as a defendant without first obtaining permission from the bankruptcy court to do so. The trustee removed the case to the bankruptcy court, and moved to dismiss the complaint. The guarantors sought to compel discovery, and failed to follow Fed. R. Civ. P. 37. The trustee and creditors sought an award of attorney's fees. The guarantors then voluntarily dismissed their action. The court concluded that it had jurisdiction over the discovery dispute upon removal of the actions, and that despite the dismissal of the actions, the court could still entertain the request for attorneys' fees. The guarantors had no basis for bringing a claim against the trustee, especially without the court's consent. The debtor had no operating business which would have allowed them to sue the trustee under the limited exception of 28 U.S.C.S. § 959(a).

OutcomeThe court concluded that it had subject matter jurisdiction to hear the removed actions, and under its ancillary jurisdiction, to hear the motion to compel discovery, which it denied, and to hear the motion for attorneys' fees and costs, for which it set a further hearing.

LexisNexis® Headnotes

Bankruptcy Law > ... > Examiners, Officers & Trustees > Duties & Functions > Capacities & Roles

HN1[ ] Duties & Functions, Capacities & Roles

A trustee acting in his or her official capacity may not be sued in a court without leave of the court that approves the appointment of the trustee. That rule is subject to a limited exception that provides: Trustees, receivers or managers of

Page 2 of 9

any property, including debtors-in-possession, may be sued, without leave of the court appointing them, with respect to any of their acts or transactions in carrying on business connected with such property. Such actions shall be subject to the general equity power of such court so far as the same may be necessary to the ends of justice, but this shall not deprive a litigant of his right to trial by jury. 28 U.S.C.S. § 959(a). The limited exception applies to a trustee's acts or transactions in conducting the debtor's business in the ordinary sense of the words or in pursuing that business as an operating enterprise. A trustee is an officer of the court that approved the appointment of the trustee. Therefore, as an officer, unless the trustee is being sued for actions taken while conducting the debtor's business, the trustee may remove any state action against him or her to the district court of the United States for the district and division embracing the place wherein it is pending. 28 U.S.C.S. § 1442(a)(3).

Civil Procedure > ... > Removal > Specific Cases Removed > Cases Involving Federal Officers

HN2[ ] Specific Cases Removed, Cases Involving Federal Officers

See 28 U.S.C.S. § 1442(a)(3).

Bankruptcy Law > Procedural Matters > Jurisdiction > General Overview

HN3[ ] Procedural Matters, Jurisdiction

Courts must ensure that their orders are interpreted and executed in the manner intended. Accordingly, bankruptcy courts have the authority to assert ancillary jurisdiction when another court is interpreting a bankruptcy court's order. Ancillary jurisdiction may be asserted for two purposes: (1) to permit disposition by a single court of claims that are, in varying respects and degrees, factually interdependent, and (2) to enable a court to function successfully, that is, to manage its proceedings, vindicate its authority, and effectuate its decrees.

Civil Procedure > Discovery & Disclosure > General Overview

Civil Procedure > ... > Discovery > Misconduct During

Discovery > Motions to Compel

HN4[ ] Civil Procedure, Discovery & Disclosure

Under Bankr. D. Ariz. R. 9013-1(e), no motion to compel, or similar type of motion dealing with a discovery dispute, is to be filed unless there is a sincere effort by the party filing the motion to resolve the dispute, and the attorney certifies what those sincere efforts were.

Civil Procedure > ... > Discovery > Misconduct During Discovery > Motions to Compel

HN5[ ] Misconduct During Discovery, Motions to Compel

Upon denial of a motion to compel, the Court must, after giving an opportunity to be heard, require the movant, the attorney filing the motion, or both to pay the party or deponent who opposed the motion its reasonable expenses incurred in opposing the motion, including attorney's fees. But the court must not order this payment if the motion was substantially justified or other circumstances make an award of expenses unjust. Fed. R. Civ. P. 37(a)(5)(B); Fed. R. Bankr. P. 7037.

Civil Procedure > Sanctions > Baseless Filings > Certification Requirements

HN6[ ] Baseless Filings, Certification Requirements

Fed. R. Civ. P. 11 is discretionary, which allows, but does not require, the courts to assess sanctions against those parties that file papers with the court for an improper reason. Additionally, the Rule provides a safe harbor provision requiring the parties seeking sanctions to provide the non-moving party with a copy of the proposed Rule 11 motion 21 days before filing the motion with the court. The non-moving party then has 21 days in which to withdraw its pleading or paper. Fed. R. Civ. P. 11(c)(2).

Civil Procedure > Discovery & Disclosure > Disclosure > Sanctions

HN7[ ] Disclosure, Sanctions

399 B.R. 247, *247; 2008 Bankr. LEXIS 3505, **3505

Page 3 of 9

Fed. R. Civ. P. 37 is more similar, in its language and effect, to the mandatory language in Fed. R. Civ. P. 11 prior to its amendment. Under Fed. R. Civ. P. 37(a)(5), when a party files a motion to compel, the court must award sanctions to either the party opposing the discovery, or the party seeking discovery, unless either party may show special circumstances that make such an award unwarranted.

Civil Procedure > Discovery & Disclosure > Disclosure > Sanctions

HN8[ ] Disclosure, Sanctions

Fed. R. Civ. P. 37 contains mandatory language and no safe harbor provision other than the special circumstances as described in the Rule.

Civil Procedure > Discovery & Disclosure > Disclosure > Sanctions

HN9[ ] Disclosure, Sanctions

Allowing a party to avoid sanctions before the court has had an opportunity to determine whether a discovery abuse has occurred, by the voluntary withdrawal of an adversary proceeding, would invalidate the purpose of Fed. R. Civ. P. 37(a)(5)(B) and be against public policy.

Counsel: [**1] For GTI CAPITAL HOLDINGS LLC, Debtor: MICHAEL W. CARMEL, MICHAEL W. CARMEL, LTD., PHOENIX, AZ.

For DAVID M. REAVES, Trustee: ALAN R. COSTELLO, COSTELLO LAW FIRM, PHOENIX, AZ.

For U.S. TRUSTEE, U.S. Trustee: PAUL A. RANDOLPH, RENEE SANDLER SHAMBLIN, OFFICE OF THE U.S. TRUSTEE, PHOENIX, AZ.

Judges: The Honorable Sarah Sharer Curley, United States Bankruptcy Judge.

Opinion by: Sarah Sharer Curley

Opinion

[*249] I. INTRODUCTION

This matter comes before the Court on a "Notice of Removal"

filed with the Court on July 10, 2008 by David M. Reaves, the Chapter 7 Trustee ("Trustee"). The Notice of Removal sought the removal of two "Independent Action[s] to Vacate State Court Judgments," ("Independent Actions") which were filed in the Maricopa County Superior Court ("State Court"). 1 Accordingly, two adversary proceedings were opened on the docket in this Court. 2 The Court set a Scheduling Conference for August 27, 2008. 3

As will be described more fully hereinafter, a number [**2] of dispositive motions were soon filed by the Defendants, which was countered with a Motion to Remand, and other relief, by the Plaintiffs. A discovery dispute soon arose which resulted in the filing of a Motion to Compel by the Plaintiffs. After a hearing on the Motion to Compel, this Court concluded that the Motion must be denied and afforded the Defendants the opportunity to seek attorneys' fees and costs in opposing the Motion to Compel. Because the Plaintiffs subsequently withdrew the Independent Actions, in both the State and Bankruptcy Courts, the Court set a hearing to determine whether it still had the jurisdiction to award the attorneys' fees and costs that the Defendants incurred.

After conducting a hearing on the jurisdictional issue on September 29, 2008, taking into consideration the arguments of each of the parties, the documents filed, and the entire record before the Court, the Court has set forth in this decision its findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52, Bankruptcy Rule 7052. As will be set forth more extensively hereinafter, this Court does have the subject matter jurisdiction to hear the issue of sanctions concerning a discovery dispute, [**3] and the discovery dispute is a core proceeding. 28 U.S.C. §§ 1334 and 157 (West 2008).

II. FACTUAL BACKGROUND

On May 8, 2003, GTI Capital Holdings, LLC, an Arizona Limited Liability Company dba Rockland Materials, and G.H. Goodman Investment Companies, LLC, an Arizona Limited Liability Company, (the "Debtors") filed their petitions for relief under Chapter 11 of the Bankruptcy Code.

On January 19, 2007, the Debtors, then represented by Mr. Carmel, commenced [*250] an action against Comerica Bank-California ("Comerica"), seeking relief under Section

1 The actions were entitled "Ariz.R.Civ.P. 60 Independent Action to Vacate State Court Judgments; Ariz.R.Civ.P. 65(a)(1)(2)(h)(i)(j); Injunctive Relief" in Case Nos. CV2008-04790 and CV2008-04791.

2 See Case Nos. 2:08-ap-00464-SSC and 2:08-ap-00471-SSC.

3 See Dkt. No. 8.

399 B.R. 247, *247; 2008 Bankr. LEXIS 3505, **3505

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510 of the Bankruptcy Code. On April 30, 2007, the case was converted to one under Chapter 7, and David M. Reaves ("Trustee") was appointed the Trustee. 4 The Trustee chose to retain Mr. Carmel as his attorney concerning the Section 510 action. 5 On February 20, 2008, the Debtors' estate, now represented by the Trustee, and Comerica participated in Mediation before the Honorable Randolph J. Haines, which resulted in a Settlement Agreement whereby Comerica agreed to pay the estate the sum of $ 950,000. The Settlement Agreement also contained a general release of all claims which the parties then had, or could have asserted, against each other in the [**4] Section 510 adversary proceeding. The Debtors' estate also executed a broad release of liability and stipulated to dismiss any other actions being asserted on behalf of the estate in other proceedings against Comerica. The Court issued an Order approving and incorporating the Settlement Agreement on March 17, 2008.

On or about June 20, 2008, the Plaintiffs simultaneously filed their two identical independent actions ("Independent Actions") with the Maricopa County Superior Court in Phoenix, Arizona. On July 10, 2008, the Trustee and his counsel filed a "Notice of Removal" to this Court. 6 Based on the usual procedures of this Court, the Independent Actions were assigned adversary proceeding numbers by the Court's Clerk's Office. 7 In reviewing the Complaints filed in the Independent Actions, the Court has determined that these Actions related to various other actions or motions filed in the Arizona state courts by Mr. and Ms. Goodman, in their capacity as non-debtor guarantors for various debts incurred by the Debtors. 8 It is unclear [**5] why West Highland was joined as a Plaintiff in the Independent Actions.

In the Independent Actions, several dispositive and other motions were filed as described hereinafter.

A. On July 10, 2008, the Trustee filed a Motion to Dismiss the Complaint. A joinder was filed by Michael Carmel, Ltd.

4 See Dkt. Entry Nos. 1457, 1461 in Administrative Case, 2:03-bk-07923-SSC (hereinafter "Administrative Case").

5 See Dkt Entry No. 1388 in Administrative Case.

6 See Dkt. Entry No. 1 in both Adversary 08-ap-464 and 08-ap-471.

7 The only noticeable difference between the claims appears to be the case number.

8 The Independent Actions appear to be a combined action in response to Case Nos. CV2004-000669 (California Portland v. Goodman, et al.); CV2005-010579 (Bombardier Capital v. Goodman, et al.); CV2003-005802; CV2003-006484; CV2003-007563; CV2005-003271 (Comerica Bank v. Goodman, et al.); CV2004-092589 (Empire S.W. v. Goodman, et al.).

on July 14, 2008;

B. On July 17, 2008, Empire Southwest, LLC and Burch & Cracchiolo, PA filed a Motion to Dismiss the Complaint;

C. On July 18, 2008, Lewis & Roca LLP filed a Motion to Dismiss the Complaint;

D. On July 21, 2008, MWMF and CPCM filed a Motion to Dismiss the Complaint;

E. On July 21, 2008, the Plaintiffs filed a Motion to Remand;

F. [**6] On July 23, 2008 the Plaintiffs filed a Motion to Convert Status Hearing to Merits Hearing;

[*251] G. On July 25, 2008, a Motion to Dismiss the Complaint was filed by Bombardier Capital, Inc.;

H. On July 25, 2008, a Motion to Consolidate Adversaries No. 08-ap-464 and 08-ap-471 was filed by Bombardier Capital, Inc. in Adversary No. 08-ap-464 only. A joinder was filed by MWMF and CPCM on July 29, 2008, and by Empire Southwest and the Trustee on July 31, 2008;

I. On July 31, 2008, the Plaintiffs filed an Omnibus Response to the Motion(s) to Dismiss/Joinders; Motion to Consolidate; Removal and a Cross-Motion for Judgment as a matter of Law; Summary Judgment; Improvident/Defective Removal.

The Court entered an Order on August 4, 2008 setting oral argument on the Motion to Consolidate the Adversary Proceedings for August 27, 2008. This Order also denied the request of the Plaintiffs that the Bankruptcy Rule 7016 Conference be converted into a hearing on the merits. 9 The August 4 Order allowed for discovery consistent with the Federal Rules of Civil Procedure and the Federal Rules of Bankruptcy Procedure. A separate hearing on the Trustee and Trustee's Counsel's Motions to Dismiss was set for September [**7] 11, 2008. The remaining Motions were set for hearing on September 17, 2008.

According to Mr. Goodman, the Plaintiffs attempted to schedule consensual depositions on "numerous occasions" both prior, and subsequent, to the issuance of the August 4 Scheduling Order. 10 There were no responses, other than by

9 The Court had entered an order scheduling a Bankruptcy Rule 7016 Conference on August 4, 2008. See Dkt. Entry No. 46 in Adv No. 08-ap-464 and Dkt Entry No. 36 in Adv. No. 08-ap-471. The August 4 Order denied the Plaintiffs' request to convert the scheduling conference to a hearing on the merits. Hence, the Motion described in Paragraph F above was denied.

10 Mr. Goodman submitted a few emails around the August 4, 2008 date in support of this allegation.

399 B.R. 247, *250; 2008 Bankr. LEXIS 3505, **3

Page 5 of 9

Brent Gardner through his counsel, Mr. Halloran. Accordingly, the Plaintiffs "issued, signed, served, and filed" subpoenas, by electronic means, on the night of August 10, 2008 in both Independent Actions. 11 The Plaintiffs filed a "Motion to Compel Subpoenaed Depositions and Documents" ("Motion to Compel") on August 11, 2008, followed by a "Motion for Accelerated Hearing" on the Motion to Compel on August 12, 2008. The Court scheduled a hearing for August 27, 2008 concerning the Motion to Compel. Several Defendants filed responses [**8] to the Motion to Compel, requesting the Court deny the Motion, issue a protective order prohibiting further discovery by the Plaintiffs, and award attorneys' fees pursuant to Fed. R. Civ. P. 37, which is incorporated into the Bankruptcy Rules as Rule 7037.

The Court held the Scheduling Conference, along with the hearings regarding the Motion to Consolidate and Motion to Compel on August 27, 2008. The Court entered its decision on the record, granting the Motion to Consolidate, but denying the Motion to Compel. Furthermore, the Court granted the Defendants' request for a protective order as to discovery prior to the hearings on the dispositive motions. The Court, however, withheld its decision regarding the appropriateness of attorneys' fees for the Defendants who opposed the Motion to Compel, and instead ordered the parties to submit affidavits regarding the fees and costs within one week. Additionally, the Court set a hearing regarding the Defendants' request for attorneys' fees for September [**9] 29, 2008.

[*252] Subsequent to the August 27, 2008 hearings, but prior to the September 29, 2008 hearing, the Plaintiffs withdrew their complaints that had been filed with the Arizona state court, and filed a "Notice of Complaint Withdrawal" with this Court. In an order dated September 16, 2008, this Court dismissed the Independent Actions without prejudice, and set a hearing for September 29, 2008 to determine whether as a result of the dismissal of the Independent Actions, the Court still had subject matter jurisdiction to entertain the Defendants' request for attorneys' fees and costs. 12 The parties presented their arguments, at the time of the September 29 hearing, and the issue was deemed under advisement thereafter.

III. DISCUSSION

The Plaintiffs argue that the Court never had the subject matter jurisdiction to hear the discovery dispute, or, in the

11 See Dkt. Entry Nos. 48 in Adversary Case 08-ap-00464-SSC and 38 in Adversary Case 08-ap-00471-SSC.

12 See Dkt. Entry No. 103.

alternative, even if the Court had the requisite jurisdiction, the Court lost said jurisdiction upon dismissal of the case. Accordingly, the Plaintiffs contend that the Court may not entertain a request for attorneys' fees by the Defendants.

Those Defendants seeking attorneys' fees contend that the Court had the subject [**10] matter jurisdiction to hear the discovery dispute upon the removal of the Independent Actions to this Court and that even though the Actions were dismissed, the Court retains the necessary jurisdiction to make a determination as to their request for attorneys' fees.

For the reasons set forth hereinafter, the Court concludes that it had jurisdiction over the discovery dispute upon removal of the Independent Actions to this Court, and that despite the dismissal of the Actions, the Court may still entertain the Defendants' request for attorneys' fees.

A. THE COURT HAS SUBJECT MATTER JURISDICTION BECAUSE THE TRUSTEE IS A NAMED DEFENDANT.

HN1[ ] A trustee acting in his or her official capacity may not be sued in a court without leave of the court that approves the appointment of the trustee. See Barton v. Barbour, 104 U.S. 126, 136-37, 26 L.Ed. 672 (1881); Leonard v. Vrooman, 383 F.2d 556, 560 (9th Cir. 1967). cert. denied, 390 U.S. 925, 88 S.Ct. 856, 19 L.Ed.2d 985 (1968); Kashani v. Fulton (In re Kashani), 190 B.R. 875 (9th Cir. BAP 1995). This rule is subject to a limited exception that provides:

Trustees, receivers or managers of any property, including debtors-in-possession, may be sued, without [**11] leave of the court appointing them, with respect to any of their acts or transactions in carrying on business connected with such property. Such actions shall be subject to the general equity power of such court so far as the same may be necessary to the ends of justice, but this shall not deprive a litigant of his right to trial by jury.

28 U.S.C. § 959(a). This limited exception applies to a trustee's "acts or transactions in conducting the debtor's business in the ordinary sense of the words or in pursuing that business as an operating enterprise." Muratore v. Darr, 375 F.3d 140, 144 (1st Cir.2004), quoted in In re Crown Vantage, Inc., 421 F.3d 963 (9th Cir. 2005). Additionally, it has long been accepted that the trustee is an officer of the court that approved the appointment of the trustee. In re Kashani, 190 B.R. 875, 884 (9th Cir. BAP 1995). Therefore, as an officer, unless the trustee is being sued for actions [*253] taken while conducting the debtor's business, the trustee may remove any state action against him or her to "the district court of the United States for the district and division embracing the place wherein it is pending. . . ." 28 U.S.C. §

399 B.R. 247, *251; 2008 Bankr. LEXIS 3505, **7

Page 6 of 9

1442(a)(3). 13

In filing their lawsuit in the Arizona state court, the Plaintiffs named the Trustee as a Defendant. While it is not entirely clear why it was necessary to name the Trustee as a Defendant, the Plaintiffs argued that the Trustee and Comerica had entered into the Settlement Agreement which somehow relieved the Plaintiffs of any liability that they were subject to as a result of being guarantors on the Debtors' loans. Apparently the Plaintiffs felt that the Trustee's involvement in reaching the Settlement Agreement with Comerica required naming him as a necessary party to the Independent Actions. For purposes of this Decision, what is critical is that the Trustee was named as a Defendant in the Independent Actions without the approval or consent of this Court. It is also clear that since the Debtors ceased their [**13] business operations years ago, the Debtors had no operating business which would have allowed the Plaintiffs to sue the Trustee under the limited exception as outlined under 28 U.S.C. § 959(a). 14 The Settlement Agreement to which the Plaintiffs refer in their Independent Actions resolved a number of disputes or claims that the bankruptcy estates had as to one of their creditors, Comerica. Consequently, Section 959(a) does not apply. The Plaintiffs, to have brought the Independent Actions, were required to first seek leave of this Court, which they did not do. Since the Plaintiffs failed to seek such leave, the Trustee properly removed the Independent Actions to this Court pursuant to Section 1442(a)(3). Accordingly, this Court did have subject matter jurisdiction over these Independent Actions.

B. THE COURT HAS SUBJECT MATTER JURISDICTION BECAUSE THE CASE INVOLVES A SETTLEMENT AGREEMENT THAT WAS ENTERED INTO AND APPROVED BY ORDER OF THIS COURT.

HN3[ ] The Courts must ensure that their orders are interpreted and executed in the manner intended. Accordingly, bankruptcy courts have the authority to assert [**14] ancillary jurisdiction when another court is interpreting a bankruptcy court's order. See In re Fibermark,

13 28 U.S.C. § 1442(a)(3) (West 2008) [**12] provides as follows:

HN2[ ] (a) A civil action or criminal prosecution commenced in a State court against any of the following may be removed by them to the district court of the United States for the district and division embracing the place wherein it is pending: …

(3) Any officer of the courts of the United States, for any act under color of office or in the performance of his duties;

14 The dockets in the Debtors' case reflect the sale of the Debtors' business early in 2004.

Inc., 369 B.R. 761 (Bankr.D.Vt. 2007). Ancillary jurisdiction may be asserted for two purposes:

(1) to permit disposition by a single court of claims that are, in varying respects and degrees, factually interdependent, and (2) to enable a court to function successfully, that is, to manage its proceedings, vindicate its authority, and effectuate its decrees[.]

Kokkonen v. Guardian Life Ins. Co. Of America, 511 U.S. 375, 380-81, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). Moreover, "bankruptcy courts have inherent or ancillary jurisdiction to interpret and enforce [*254] their own orders wholly independent of the statutory grant in 28 U.S.C. § 1334." In re Chateaugay Corp., 201 B.R. 48, 62 (Bankr.S.D.N.Y.1996), aff'd 213 B.R. 633 (S.D.N.Y.1997). Relevant to this Court's analysis of its subject matter jurisdiction, as it relates to the Settlement Agreement, is the portion of the Kokkonen decision which states that although the particular district court did not have ancillary jurisdiction to enforce a settlement agreement:

[t]he situation would be quite different if the parties' obligation to comply [**15] with the terms of the settlement agreement had been made part of the order of dismissal -- either by separate provision. . . or by incorporating the terms of the settlement agreement in the order. In that event, a breach of the agreement would be a violation of the order, and ancillary jurisdiction to enforce the agreement would exist. . . . The judge's mere awareness and approval of the terms of the settlement agreement do not suffice to make them part of his order.

at 381, 511 U.S. 375, 114 S.Ct. 1673, 128 L. Ed. 2d 391.

As part of their Independent Actions, the Plaintiffs sought enforcement, by another court, of this Court's Order incorporating the Settlement Agreement between the bankruptcy estate and Comerica. The Plaintiffs argued that the broad release language contained in the Settlement Agreement applied to them as guarantors, thereby releasing the Plaintiffs from any liability guaranteed by them as to the unpaid debts of the Debtors. Moreover, the Plaintiffs argued that the Settlement Agreement not only released them from their guaranty obligations to Comerica, but also released them from their guaranty obligations to all creditors, arguing that since the creditors had previously acted in a "joint defense" [**16] against the Debtors, the creditors, as a group, were bound by the actions of their individual members. Consequently, the Plaintiffs theorize that the Settlement Agreement between the Trustee and Comerica acted as a release from their guaranty liability of the Plaintiffs on all of their debts. The Court need not, once again, analyze and offer an opinion as to the merits of the Settlement Agreement or the

399 B.R. 247, *253; 2008 Bankr. LEXIS 3505, **11

Page 7 of 9

Plaintiff's current arguments as to how that Agreement somehow relieved them of all liability on their guaranties. It is enough that the Plaintiffs delved into the issue of the interpretation of the Settlement Agreement in their Independent Actions. By so acting, the Plaintiffs requested another court to interpret what this Court had done and what it had set forth in one of its orders. As a result, this Court had the ability to entertain subject matter jurisdiction over the Independent Actions by asserting its ancillary jurisdiction to interpret its own order. The fact that the Plaintiffs ultimately decided to withdraw their Independent Actions does not vitiate this Court's initial subject matter jurisdiction.

C. ALTHOUGH THE PLAINTIFFS WITHDREW THEIR COMPLAINTS PRIOR TO THE HEARING [**17] TO DETERMINE ATTORNEYS' FEES PURSUANT TO FEDERAL RULES OF CIVIL PROCEDURE 37(a)(5)(B), THE COURT NONETHELESS HAS JURISDICTION TO HEAR THE MATTER.

The Plaintiffs commenced the Independent Actions in the Arizona state court on June 20, 2008. Summonses were timely issued and sent to the named Defendants. The Trustee, as a named Defendant, received a summons from the State Court and promptly filed a Notice of Removal with this Court along with "copies of all process, pleadings. . . and minute entries and orders filed in the [state] litigation [*255] prior to removal, plus. . . a copy of the docket for the removed litigation from the court where the removed litigation is pending." Local Rules of Bankruptcy § 9027-1(c).

Upon receiving the Notice of Removal, this Court promptly set a Bankruptcy Rule 7016 scheduling conference. However, prior to the Scheduling Conference, several pleadings were filed including: (i) several Motions to Dismiss; (ii) a Motion to Remand; and (iii) a Motion to Consolidate the Adversary Proceedings. The Court entered an Order setting these matters for hearing and provided for that discovery which could be conducted by the parties that was consistent with the Federal Rules [**18] of Civil Procedure and the Bankruptcy Rules.

The Plaintiffs misinterpreted the Court's Order as a grant of broad authority to perform whatever discovery they felt was necessary at the time. Accordingly, the Plaintiffs served subpoenas on the Defendants, via electronic means, on the night of August 10, 2008. The subpoenas requested the presence of the Defendants in order for the Plaintiffs to perform depositions, and further required the Defendants to bring various documents for the Plaintiffs to review. Critically, before giving the Defendants an opportunity to respond, the Plaintiffs filed a Motion to Compel pursuant to Bankruptcy Rule 7037, which incorporates Fed. R. Civ. P. 37.

A hearing took place on the Plaintiffs' Motion to Compel. The Court, in its oral decision denying the Motion to Compel, made it clear that it had several concerns with the actions the Plaintiffs took in completing "jurisdictional discovery." The Court stated that it did not understand why, given the pending dispositive motions, any discovery was necessary until those motions had been heard by the Court. To the extent that any discovery was necessary, the Order limited same to "whatever discovery [was] appropriate [**19] and consistent with the Federal Rules of Civil Procedure and the Federal Rules of Bankruptcy Procedure." Because the Court is not always aware when the parties to an adversary proceeding have their initial "meet and confer conference," as required by Fed. R. Civ. P. 26(f), it assumes that the parties will have that initial conference, discuss discovery issues, if necessary, and set up a procedure to ensure that any discovery that may be necessary is handled in an expedited and appropriate manner. What is different in this matter is that the Plaintiffs "papered" the Defendants with their discovery requests, demanded that the Defendants contact them to arrange numerous depositions and the turnover of documents, and then moved to an accelerated request to compel the discovery without even bothering to set up the initial Fed. R. Civ. P. 26(f) meet and confer. Thus, the Plaintiffs failed to comply with the very Federal Rule that would have allowed any limited discovery on the subject matter jurisdictional issue. Since no meeting took place with the Defendants, the Plaintiffs were premature in their discovery attempts.

At the hearing on the Motion to Compel, the Court was also concerned with [**20] the fact that the Plaintiffs felt it was necessary to depose Defendants' counsel. The Court is at a loss to determine how counsel would have any relevant information on a subject matter jurisdictional issue even if the appropriate meet and confer under Fed. R. Civ. P. 26(f) had occurred. Also of concern to the Court at the hearing was the fact that none of the Defendants was afforded any opportunity to even advise the Plaintiffs of any discovery issues. Indeed the Plaintiffs filed the Motion to Compel roughly one day after they served the Defendants with the discovery requests. [*256] HN4[ ] Under the Local Rules of this Court, no motion to compel, or similar type of motion dealing with a discovery dispute, is to be filed unless there is a sincere effort by the party filing the motion to resolve the dispute, and the attorney certifies what those sincere efforts were. See Local Rule 9013-1(e). In reviewing the Motion to Compel filed by the Plaintiffs, this Court concludes that there were minimal, and certainly not sincere, efforts by the Plaintiffs to resolve the issues presented. Given the time frame between the electronic discovery requests and the Plaintiffs' filing of the Motion to Compel, the [**21] Defendants were not even afforded an appropriate opportunity to respond to the subpoenas.

399 B.R. 247, *254; 2008 Bankr. LEXIS 3505, **16

Page 8 of 9

Given this background, does the withdrawal of the Independent Actions by the Plaintiffs somehow absolve them of any responsibility or liability for their potential discovery abuses? HN5[ ] Upon denial of a motion to compel, the Court:

must, after giving an opportunity to be heard, require the movant, the attorney filing the motion, or both to pay the party or deponent who opposed the motion its reasonable expenses incurred in opposing the motion, including attorney's fees. But the court must not order this payment if the motion was substantially justified or other circumstances make an award of expenses unjust.

Fed. R. Civ. P. 37(a)(5)(B); Bankruptcy Rule 7037. At the conclusion of the hearing on the Motion to Compel, the Court denied the Motion, granted the Defendants' request for a protective order, and permitted the Defendants to submit a request for attorneys' fees and costs in opposing the Plaintiffs' Motion. This allowed the Defendants the opportunity or prepare their affidavits on the attorneys' fees and costs incurred and afforded the Plaintiffs the opportunity to challenge the reasonableness of [**22] the fees and costs requested and to present their argument as to whether the Motion to Compel was "substantially justified" or there were other "circumstances" which would make such "an award of expenses unjust." The Court set a hearing for September 29, 2008.

Prior to the hearing date, the Plaintiffs withdrew their Independent Actions in the State Court, and filed a Notice of Complaint Withdrawal with this Court. The Court entered an Order dismissing the case without prejudice on September 16, 2008 and set a hearing for September 29, 2008 to determine whether the Court could still award the attorneys' fees of the Defendants even though the Independent Actions had been dismissed.

While the Court has been unable to find any direct authority on this matter, the issues involved in this analysis are similar to those issues involved in an analysis of Fed. R. Civ. P. 11. Rule 11 was amended in 1993. Prior to the amendments, Rule 11 contained mandatory language requiring courts to assess sanctions against an attorney, law firm, or party that filed certain documents with the court for any improper reason. Under the prior version of the Rule, the Supreme Court held:

[i]n order to comply with Rule 11's [**23] requirement that a court 'shall' impose sanctions 'if a pleading, motion, or other paper is signed in violation of the rule,' a court must have the authority to consider whether there has been a violation of the signing requirement regardless of the dismissal of the underlying action.

Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 110 S.Ct.

2447, 110 L.Ed. 2d 359 (1990).

In 1993, Rule 11 was amended in two respects. First, the language ofHN6[ ] Rule 11 is now discretionary, which allows, but does not require, the courts to assess sanctions [*257] against those parties that file papers with the court for an improper reason. Additionally, the Rule now provides a safe harbor provision requiring the parties seeking sanctions to provide the non-moving party with a copy of the proposed Rule 11 motion 21 days before filing the motion with the court. The non-moving party then has 21 days in which to withdraw its pleading or paper. Fed. Rul. Civ. P. 11(c)(2). If, for instance, the non-moving party withdraws its complaint within the time allotted, the other party may not file a motion for sanctions with the court. 15

However, in comparing the current language of Rule 11 with that of Fed. R. Civ. P. 37, Bankruptcy Rule 7037, this Court concludes thatHN7[ ] Fed. R. Civ. P. 37 is more similar, in its language and effect, to the language in Rule 11 prior to its amendment. Under Fed. R. Civ. P. 37(a)(5), when a party files a motion to compel, the court must award sanctions to either the party opposing the discovery, or the party seeking discovery, unless either party may show special circumstances that make such an award unwarranted. Fed. R. Civ. P. 37(a)(5)(A), (B). Just as with the prior version of Rule 11, HN8[ ] Rule 37 contains mandatory language and no safe harbor provision other [**25] than the special circumstances as described in the Rule. Given the changes to Rule 11, Congress could have acted to amend any other Federal Rules which had similar mandatory language. That has not happened. Accordingly, the Court finds the reasoning in the Cooter & Gell decision to be instructive. Under the Cooter & Gell analysis, this Court has not only the ability, but also the obligation, to hear the Defendants' Motion for Sanctions or request for attorneys' fees and costs although the Independent Actions have been dismissed.

Moreover,HN9[ ] allowing a party to avoid sanctions before the Court has had an opportunity to determine whether a discovery abuse has occurred, by the voluntary withdrawal of an adversary proceeding, would certainly invalidate the

15 In response to these amendments to Rule 11, the courts now allow a motion for sanctions to "be [**24] filed with the court after judgment [only if] the moving party . . . first [serves] the motion for sanctions on the offending party twenty-one (21) or more days prior to [the] final judgment." Hamil v. Mobex Managed Servs. Co., 208 F.R.D. 247, 250 (N.D.Ind.2002). Accordingly, under Rule 11, as amended, the courts have denied a party the right to file a motion for sanctions if it was not presented to the non-moving party more than 21 days prior to the case being dismissed. See Ridder v. City of Springfield, 109 F.3d 288 (6th Cir. 1997).

399 B.R. 247, *256; 2008 Bankr. LEXIS 3505, **21

Page 9 of 9

purpose of Fed. R. Civ. P. 37(a)(5)(B) and be against public policy. If this Court does not have the subject matter jurisdiction to determine whether attorneys' fees and costs are warranted for a discovery abuse in the Independent Actions, no court will have jurisdiction to hear the matter. Such a result is unacceptable. It would allow a wrongdoer to never be held accountable.

To the extent that there still remains any ambiguity for this [**26] Court to hear the issue as to the award of the Defendants' attorneys' fees and costs, this Court will amend its order which dismissed the Independent Actions without prejudice for the limited purpose of hearing and resolving the issue of whether the Defendants are entitled to attorneys' fees and costs. The Court may, sua sponte, always review and amend its orders so long as no intervening rights have vested. In this case, the Court knows of no change in the rights or positions of the parties that would be affected by this limited amendment to the Dismissal Order. In re Lenox, 902 F.2d 737 (9th Cir. 1990).

[*258] IV. CONCLUSION

Based upon the foregoing, this Court concludes that it has subject matter jurisdiction to hear the Independent Actions and that as a part of its ancillary jurisdiction, this Court had the ability to hear the Motion to Compel filed by the Plaintiffs. As a result of the denial of the Motion to Compel, the Court has the subject matter jurisdiction to hear the Defendants' request for attorneys' fees and costs under Fed. R. Civ. P. 37 (a)(5)(B). The Court's ability to hear the Defendants' request under Fed. R. Civ. P. 37 (a)(5)(B) continues even though the Plaintiffs withdrew [**27] the Independent Actions after this Court's decision denying the Plaintiffs' Motion to Compel. The Court will set a further hearing on the Defendants' request for attorneys' fees and costs by separate order of this Court.

DATED this 19th day of November, 2008.

/s/ Sarah Sharer Curley

The Honorable Sarah Sharer Curley

United States Bankruptcy Judge

End of Document

399 B.R. 247, *257; 2008 Bankr. LEXIS 3505, **24

12

PositiveAs of: September 28, 2017 8:01 PM Z

Triad Commer. Captive Co. v. Carmel (In re GTI Capital Holdings, L.L.C.)

United States Bankruptcy Appellate Panel for the Ninth Circuit

July 30, 2009, Argued and Submitted at San Francisco, California; August 20, 2009, Filed

BAP No. AZ-09-1053-JuMkD

Reporter2009 Bankr. LEXIS 4539 *; 2009 WL 7809930

In re: GTI CAPITAL HOLDINGS, L.L.C., dba ROCKLAND MATERIALS, Debtor, TRIAD COMMERCIAL CAPTIVE CO.; STIRLING BRIDGE, L.L.C.; NEW YORK - NEWPORT ASSURANCE CO.; TERI and GRANT H. GOODMAN, Appellants, v. MICHAEL WARREN CARMEL; COMERICA BANK; BURCH AND CRACCHIOLO, P.A., Appellees.

Notice: THIS DISPOSITION IS NOT APPROPRIATE FOR PUBLICATION. ALTHOUGH IT MAY BE CITED FOR WHATEVER PERSUASIVE VALUE IT MAY HAVE (SEE FED. R. APP. P. 32.1), IT HAS NO PRECEDENTIAL VALUE. SEE 9TH CIR. BAP RULE 8013-1.

Subsequent History: Affirmed by Triad Commer. Captive Co. v. Comerica Bank (In re GTI Capital Holdings, LLC), 399 Fed. Appx. 236, 2010 U.S. App. LEXIS 20912 (9th Cir., 2010)

Prior History: [*1] Appeal from the United States Bankruptcy Court for the District of Arizona. Bk. Nos. 03-07923, 03-07924 (Jointly Administered), Adv. Nos. 08-00464, 08-00471 (Consolidated). Hon. Sarah Sharer Curley, Bankruptcy Judge, Presiding.

Core Terms

discovery, bankruptcy court, Amend, motion to compel, parties, subject matter jurisdiction, attorneys', expenses, requests, denial of motion, Motions, state court, awards, issues, costs, disqualification motion, abused, confer, merits, substantial justification, set forth, post-dismissal, certification, Holdings, contempt, lawyers, orders, adversary proceeding, jurisdictional, depositions

Case Summary

Procedural PostureThe Notice of Appeals (NOA) attached the U.S. Bankruptcy Court for the District of Arizona's Order Denying Three

Motions to Alter/Amend Judgment, or Alternatively Motion to Reconsider, which apparently was the order appellants challenged. Appellants filed the motions after the bankruptcy court dismissed the consolidated adversary proceedings against appellees due to appellants' voluntary withdrawal of underlying complaints in state court.

Overview

This appeal involved the narrow issues of whether the bankruptcy court had post-dismissal jurisdiction to consider the Fed. R. Civ. P. 37 expense request of an entity which was a named defendant in two state court actions (and a defendant in the adversary proceeding) and, if so, whether it abused its discretion in granting the request. The court concluded that the bankruptcy court did not abuse its discretion when it amended the dismissal order to retain jurisdiction for the limited purpose of deciding the Rule 37 expense requests. Next, since the bankruptcy court denied appellants' Motion to Compel, Rule 37(a)(5)(B) required that they pay the aforementioned defendant's expenses incurred in opposing the motion unless the court found that the motion was substantially justified or other circumstances would make an award of expenses unjust. Appellants had the burden of establishing substantial justification and special circumstances, but failed to meet it. The bankruptcy court's award of fees and costs under Rule 37(a)(5)(B) was not an abuse of discretion. Also, it did not abuse its discretion by denying appellants' Motion to Alter/Amend Judgment dated December 22, 2008.

OutcomeThe bankruptcy court was affirmed.

LexisNexis® Headnotes

Civil Procedure > Discovery & Disclosure > Disclosure > Sanctions

Page 2 of 11

HN1[ ] Disclosure, Sanctions

See Fed. R. Civ. P. 37(a)(5)(B).

Bankruptcy Law > ... > Judicial Review > Standards of Review > Abuse of Discretion

Civil Procedure > Judgments > Relief From Judgments > Altering & Amending Judgments

HN2[ ] Standards of Review, Abuse of Discretion

An appellate court reviews a bankruptcy court's decision to deny a motion to alter or amend a judgment or for reconsideration under the abuse of discretion standard.

Bankruptcy Law > ... > Judicial Review > Standards of Review > De Novo Standard of Review

Civil Procedure > ... > Subject Matter Jurisdiction > Jurisdiction Over Actions > General Overview

HN3[ ] Standards of Review, De Novo Standard of Review

The existence of a bankruptcy court's jurisdiction is a question of law subject to de novo review.

Civil Procedure > Appeals > Standards of Review > Abuse of Discretion

Civil Procedure > ... > Inability to Proceed > Disqualification & Recusal > General Overview

HN4[ ] Standards of Review, Abuse of Discretion

A trial judge's decision, which declines a recusal request, is reviewed for an abuse of discretion.

Civil Procedure > Appeals > Standards of Review > Abuse of Discretion

Civil Procedure > Discovery & Disclosure > Disclosure > Sanctions

HN5[ ] Standards of Review, Abuse of Discretion

An award for fees and costs pursuant to Fed. R. Civ. P. 37 is reviewed for an abuse of discretion. A court abuses its discretion when it bases its decision on an erroneous conclusion of law or when the record contains no evidence on which it could rationally base its decision.

Civil Procedure > Appeals > General Overview

Civil Procedure > ... > Justiciability > Standing > General Overview

HN6[ ] Civil Procedure, Appeals

Appellate standing requires that a party must demonstrate that it is directly and adversely pecuniarily affected by the order at issue.

Civil Procedure > Judgments > Relief From Judgments > Altering & Amending Judgments

Civil Procedure > Judgments > Relief From Judgments > General Overview

HN7[ ] Relief From Judgments, Altering & Amending Judgments

Fed. R. Civ. P. 59, 60 both require a motion "after entry of judgment."

Civil Procedure > Appeals > Appellate Jurisdiction > General Overview

HN8[ ] Appeals, Appellate Jurisdiction

The failure to timely file a notice of appeal is a jurisdictional defect barring appellate review.

Civil Procedure > Discovery &

2009 Bankr. LEXIS 4539, *1

Page 3 of 11

Disclosure > Disclosure > Sanctions

HN9[ ] Disclosure, Sanctions

A finding of bad faith is not required for sanctions under Fed. R. Civ. P. 37.

Civil Procedure > ... > Subject Matter Jurisdiction > Jurisdiction Over Actions > General Overview

Civil Procedure > Discovery & Disclosure > Disclosure > Sanctions

HN10[ ] Subject Matter Jurisdiction, Jurisdiction Over Actions

Well-developed case law makes clear that a court's authority to award sanctions is not dependent on the court's subject matter jurisdiction. The fact a district court lacks jurisdiction to consider the merits of the case does not preclude it from imposing sanctions. Whether a court should impose sanctions for abuse of the judicial process is a collateral matter that may be determined after the suit has terminated. One court has explained that "jurisdiction" is an all-purpose word denoting adjudicatory power. A court may have power to do some things but not others, and the use of "lack of jurisdiction" to describe the things it may not do does not mean that the court is out of business.

Civil Procedure > Discovery & Disclosure > General Overview

Civil Procedure > ... > Jurisdiction > Subject Matter Jurisdiction > General Overview

HN11[ ] Civil Procedure, Discovery & Disclosure

It is well-settled that a trial court has jurisdiction to determine its jurisdiction. Further, the court may allow discovery to aid in determining whether it has subject matter jurisdiction. It follows then that a court has the power to supervise that discovery and award expenses authorized under Fed. R. Civ. P. 37 for any discovery abuse that occurs.

Civil Procedure > ... > Discovery > Misconduct During

Discovery > Motions to Compel

Evidence > Burdens of Proof > Allocation

Civil Procedure > Discovery & Disclosure > Disclosure > Sanctions

HN12[ ] Misconduct During Discovery, Motions to Compel

When a court denies a movant's motion to compel, Fed. R. Civ. P. 37(a)(5)(B) requires that the movant pay the non-movant's expenses incurred in opposing the motion unless the court finds that the motion was substantially justified or other circumstances would make an award of expenses unjust. The movant has the burden of establishing substantial justification and special circumstances.

Civil Procedure > Discovery & Disclosure > General Overview

HN13[ ] Civil Procedure, Discovery & Disclosure

Fed. R. Civ. P. 26(f) requires parties to confer as soon as practicable and consider the nature and basis of their claims and defenses and the possibilities for promptly settling or resolving the case; discuss any issues about discoverable information; and develop a proposed discovery plan. Fed. R. Civ. P. 26(f)(1), (2).

Civil Procedure > Discovery & Disclosure > General Overview

HN14[ ] Civil Procedure, Discovery & Disclosure

Bankr. D. Ariz. R. 9013-1(e) requires certification that the attorney made sincere efforts to resolve the dispute. In construing a similar local rule, one court has emphasized that the purpose of this rule is simple: to lessen the burden on the court and reduce the unnecessary expenditure of resources by litigants, through promotion of informal, extrajudicial resolution of discovery disputes. Rule 9013-1(e) states: No motion concerning discovery disputes will be considered unless a statement of the moving party or its counsel, if represented, is attached certifying that after personal consultation and sincere efforts to do so, the parties have been unable to resolve the matter.

2009 Bankr. LEXIS 4539, *1

Page 4 of 11

Civil Procedure > Discovery & Disclosure > Disclosure > Motions to Compel

HN15[ ] Disclosure, Motions to Compel

Fed. R. Civ. P. 37(a)(1) requires that a motion to compel disclosure or discovery include a certification that the movant has in good faith conferred or attempted to confer with the person or party failing to make disclosure or discovery in an effort to obtain it without court action.

Civil Procedure > Discovery & Disclosure > Disclosure > Motions to Compel

HN16[ ] Disclosure, Motions to Compel

Two components are necessary to constitute a facially valid motion to compel. First is the actual certification document. The certification must accurately and specifically convey to the court who, where, how, and when the respective parties attempted to personally resolve the discovery dispute. Second is the performance, which also has two elements. The moving party performs, according to the federal rule, by certifying that he or she has (1) in good faith (2) conferred or attempted to confer. Each of these two subcomponents must be manifested by the facts of a particular case in order for a certification to have efficacy and for the discovery motion to be considered. A moving party must include more than a cursory recitation that counsel have been unable to resolve the matter.

Civil Procedure > Discovery & Disclosure > Disclosure > General Overview

Civil Procedure > ... > Subject Matter Jurisdiction > Jurisdiction Over Actions > General Overview

HN17[ ] Discovery & Disclosure, Disclosure

Discovery of an issue relating to subject matter jurisdiction is appropriate only when additional facts are required to determine whether jurisdiction exists. However, discovery is not necessary or appropriate when it is clear that discovery would not uncover facts providing a basis--or lack thereof--

for jurisdiction.

Civil Procedure > Appeals > Standards of Review > Abuse of Discretion

Civil Procedure > Judgments > Relief From Judgments > Altering & Amending Judgments

HN18[ ] Standards of Review, Abuse of Discretion

A court abuses its discretion by denying a motion for reconsideration if its decision involved clear error.

Judges: Before: JURY, MARKELL, and DUNN, Bankruptcy Judges.

Opinion

MEMORANDUM1

At the outset, we briefly clarify what is before us in this appeal. The Notice of Appeal ("NOA") designated the orders appealed from as Civil Contempt Orders entered on February 8, 2009. However, our review of the bankruptcy docket shows that there were no orders entered on that date nor any Civil Contempt Orders entered on any date.

The NOA attached the bankruptcy court's Order Denying Three Motions to Alter/Amend Judgment, or Alternatively Motion to Reconsider ("Order Denying Motions to Alter/Amend Judgment"), which apparently is the order challenged in this appeal.2 The order appealed from relates to three separate underlying Motions to Alter/Amend Judgment filed by Appellants on December 19, 22 and 23, 2008. Appellants filed the motions after the bankruptcy court dismissed the consolidated adversary proceedings at issue in this appeal due to Appellants' voluntary withdrawal of the underlying complaints [*2] in the state court.

1 This disposition is not appropriate for publication. Although it may be cited for whatever persuasive value it may have (see Fed. R. App. P. 32.1), it has no precedential value. See 9th Cir. BAP Rule 8013-1.

2 We take judicial notice of the Order Denying Motions to Alter/Amend Judgment and other pleadings not included in the record. Atwood v. Chase Manhattan Mortgage Co. (In re Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003). The NOA presented in Appellants' Record on Appeal had no order attached. The NOA on the BAP docket, however, did attach the referenced order.

2009 Bankr. LEXIS 4539, *1

Page 5 of 11

Appellants' December 19, 2008 motion related to the court's November 19, 2008 order and published decision, Goodman v. Cal. Portland Cement Co. (In re GTI Capital Holdings, L.L.C.), 399 B.R. 247 (Bankr. D. Ariz. 2008), in which the court found that it had post-dismissal jurisdiction to consider the expense requests of Michael W. Carmel, Ltd. ("Carmel"), Empire Southwest, LLC ("Empire") and Comerica Bank ("Comerica") under Rule 37(a)(5)(B).3

Appellants' December 22, 2008 motion related to the court's order dated December 19, 2008, awarding $3,251.20 in attorneys' fees and $23.20 in costs under Rule 37 to [*3] Empire.

Finally, Appellants' December 23, 2008 motion related to the court's minute order dated December 9, 2008 denying their motion to disqualify the bankruptcy judge.

The bankruptcy court denied all three motions by order entered on February 5, 2009, concluding that Appellants failed to set forth a basis to grant them any type of affirmative relief under Rules 59 or 60.

Based on our review and as explained below, we conclude that this appeal involves the narrow issues of whether the court had post-dismissal jurisdiction to consider Empire's Rule 37 expense request and, if so, whether it abused its discretion in granting the request. We hold that as a matter of law, the court had post-dismissal jurisdiction to consider collateral matters such as the Rule 37 expense request. We also conclude that the bankruptcy court did not abuse its discretion in making the award. Accordingly, we AFFIRM.

I. FACTS

On May 8, 2003 GTI Capital Holdings, LLC dba Rockland Materials and G.H. Goodman Investment Companies, LLC (collectively, "Debtors") filed separate petitions under chapter 11. On June 15, 2003 the bankruptcy court issued an Order for Joint Administration, transferred the cases to one judge and [*4] directed use of a consolidated caption.

On April 30, 2007 Debtors' cases converted to chapter 7 and David M. Reaves was appointed trustee. Thereafter the trustee and Comerica settled various claims (the "Settlement") arising out of two adversary proceedings previously filed by Debtors. The Settlement contained broad, mutual releases of all claims between the estates and Comerica and required Comerica to

3 Unless otherwise indicated all rule references are to Federal Rules of Civil Procedure 26, 37, 59 and 60, incorporated by, the Federal Rules of Bankruptcy Procedure 7026, 7037, 9023 and 9024, respectively.

pay $950,000 to the estates. Grant Goodman, an attorney, and other entities he represented objected to the Settlement on the grounds that the trustee did not have standing and the releases were contrary to Ninth Circuit law.

The bankruptcy court approved the Settlement on March 17, 2008 in a written decision and entered a separate order referring to its written decision on the same date. This panel affirmed the bankruptcy court's ruling on December 9, 2008 in Triad Commercial Captive Co. v. Reaves (In re GTI Capital Holdings, L.L.C.), BAP No. AZ-08-1079-MkEMo.4 Goodman, on behalf of himself and the entities he represented, appealed this decision to the Ninth Circuit on January 21, 2009.

A. The State Court "Independent Actions", Removal to the Bankruptcy Court and Subsequent Dismissals

On June 20, 2008 Appellants filed two lawsuits in the Maricopa County Superior Court which named, among others, the trustee, Carmel, Empire and Comerica as defendants (the "Independent Actions"). The Independent Actions, which were virtually identical, essentially sought to vacate state court judgments obtained by Empire and others against Goodman and his wife as guarantors for Debtors. The basis for the relief sought by Appellants were the releases in the Settlement and fraud upon the court by the lawyers who represented various named defendants.

On July 10, 2008 the trustee filed a Notice of Removal of the Independent Actions (Adv. Nos. 08-00464 and 08-00471) to the bankruptcy court.5 The removal was based on Appellants' failure to obtain leave in the bankruptcy court to sue the trustee in state court.

Thereafter the trustee, Empire and other defendants filed motions to dismiss the adversary proceedings.6

On July 17, 2008 the bankruptcy court issued an order setting a status conference for August 27, 2008.

On July 21, 2008 Appellants filed a Motion to Remand. In that motion, Appellants maintained that the removal of the

4 The details relating to the underlying claims, which are not relevant to the pending appeal, are set [*5] forth in that decision and will not be restated here.

5 On August 27, 2008 the court granted a Motion to Consolidate the two adversary proceedings under Adv. No. 08-00464.

6 The court set [*6] a hearing on the trustee's motion to dismiss for September 11, 2008; the remaining motions to dismiss were set for hearing on September 17, 2008.

2009 Bankr. LEXIS 4539, *2

Page 6 of 11

Independent Actions was "fatally flawed given the lack of jurisdiction of this Article I Court to entertain non-core state law proceedings . . . ."

On July 23, 2008 Appellants filed a Motion to Convert Status Hearing To Merits Hearing. In that motion, Appellants requested emergency court approval to conduct jurisdictional discovery and reiterated the court's lack of jurisdiction over the Independent Actions. Appellants asserted in the motion that they "requested lawyers (Reaves, Carmel, Novotny, Clemency, Gardner, and Meyers)7 to make themselves available for six (6) consecutive one hour depositions on the issue of 'jurisdiction', the lawyers' public filings, and statements of record embedded within their most recent collective barrage of filings."

On August 4, 2008 the court issued an Order Setting Hearing and Briefing Schedule (the "Scheduling Order"). The court also addressed Appellants' request to conduct discovery: "The Court will allow, at this time, whatever discovery is appropriate and consistent with the Federal Rules of Civil Procedure and the Federal Rules of Bankruptcy Procedure." The court denied Appellants' Motion to Convert Status Hearing to Merits Hearing as moot.

Appellants commenced discovery both prior, and subsequent, to the issuance of the Scheduling Order. On August 10, 2008 (a Sunday) Appellants served subpoenas electronically on various lawyers. On August 11, 2008 Appellants filed a Pre-Trial Motion to Compel Depositions; Motion to Compel Document Disclosure(s) and Motion Requesting Emergency Hearing (the "Motion to Compel"). On August 12, 2008 Appellants filed another motion titled Pre-Trial Motion to Accelerate/Expedite Hearing on Discovery Depositions.

Comerica moved for a protective order on August 14, 2008 and requested an award of attorneys' fees and costs under Rule 37(a)(5)(B). Carmel joined Comerica's motion for a protective order on August 20, 2008 and [*8] filed a separate motion for attorneys' fees and costs on August 28, 2008. Empire also filed a response to the Motion to Compel, requested that the court deny the motion, issue a protective order prohibiting further discovery by Appellants and award attorney fees' and costs under Rule 37(a)(5)(B).8

At the August 27, 2008 hearing, the court denied Appellants' Motion to Compel. The court agreed with the various parties

7 With the exception of Reaves and Carmel, the lawyers apparently represented various [*7] defendants named in the Independent Actions.

8 The trustee, California Portland Cement Co. and Bombardier Capital, Inc. also responded to Appellants' Motion to Compel.

that the subpoenas did not make sense at that point in time because of the number of dispositive motions pending before the court. The court also noted that the subpoenas were not properly served and concluded that expedited discovery would not proceed. The court did not award attorneys' fees at that time but gave the parties time to file their requests and set a hearing for September 29, 2008.

After the August 27, 2008 hearing, but prior to September 29, 2008, Appellants withdrew their complaints that had been filed in the state court9 and filed a Notice of Complaint Withdrawal with the bankruptcy court. The bankruptcy court dismissed the Independent Actions [*9] without prejudice by order entered on September 16, 2008.

B. The Court's November 19, 2008 Decision On Its Jurisdiction

In a published decision dated November 19, 2008, the court held that it had subject matter jurisdiction over the removed Independent Actions for essentially two reasons. First, the court found Appellants improperly named the trustee as a defendant in their state court complaints without seeking leave of court. Second, the lawsuits involved the interpretation of the Settlement which it had approved. In re GTI Capital Holdings, L.L.C., 399 B.R. 247.

The court further ruled that despite the dismissal of the Independent Actions, it retained jurisdiction to determine the Rule 37 expense requests of Carmel, Empire and Comerica based on the holding and reasoning set forth in Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 110 S. Ct. 2447, 110 L. Ed. 2d 359 (1990).

Finally, the court sua sponte amended its order dismissing the Independent Actions for the limited purpose [*10] of hearing and resolving the Rule 37 expense requests. In re GTI Capital Holdings, L.L.C., 399 B.R. at 257.

The court entered an order on November 19, 2008 which incorporated its decision.

C. The Expense Awards Under Rule 37(a)(5)(B); Motion To Disqualify

The court heard the Rule 37 expense requests on December 9, 2008 together with Appellants' Motion to Disqualify.10

9 Because the Independent Actions had been removed, any further proceedings in the state court would be a nullity. Appellants' actions in the state court were harmless however since the bankruptcy court subsequently dismissed the Independent Actions.

10 This motion was not properly noticed and served, as it was filed on

2009 Bankr. LEXIS 4539, *6

Page 7 of 11

Goodman appeared at the hearing, but presented no argument — orally or in writing — as to why he was substantially justified in bringing the Motion to Compel. Before the court recited its rulings on the record regarding the Motion to Disqualify or the Rule 37 expense requests, Goodman requested permission to excuse himself and left the hearing.

On the Motion to Disqualify, the court considered the standards for disqualification and concluded there was no basis for disqualification and denied the motion.

The court then ruled on the Rule 37 expense requests. Rule 37(a)(5)(B) provides that if a motion to compel is denied,

HN1[ ] [T]he court . . . must, after giving an opportunity to be heard, require the movant, the attorney [*11] filing the motion, or both to pay the party or deponent who opposed the motion its reasonable expenses incurred in opposing the motion, including attorney's fees. But the court must not order this payment if the motion was substantially justified or other circumstances make an award of expenses unjust.

The court found that Appellants' Motion to Compel was neither substantially justified nor did other circumstances make an award of expenses unjust. The court explained that Goodman failed to meet and confer under Rule 26(f) regarding the discovery. Next, after improperly serving the subpoenas by email, Goodman did not allow the parties time to respond but instead immediately filed his Motion to Compel. Lastly, the court could not discern what information the lawyers could possibly provide through discovery to aid Goodman on the issue of the court's subject matter jurisdiction.

Accordingly, the court awarded $2,655 in attorneys' fees to Carmel, $3,251.20 in attorneys' fees and $23.20 in costs to Empire, and $5,526.50 in attorneys' fees and $230.40 in costs to Comerica by orders entered on December 11, 2008, December 19, 2008 and January 7, 2009, respectively.

D. Appellants' Motions To Alter/Amend [*12] Judgment

Appellants filed a Motion to Alter/Amend Judgment on December 19, 2008. They filed a second Omnibus Motion to Alter/Amend Judgment on December 22, 2008 and a third Motion to Alter/Amend Judgment on December 23, 2008. None of the motions explicitly or implicitly requested any affirmative relief from the court.

With respect to the December 19, 2008 motion, the bankruptcy court found that it

December 3, 2008, six days before the hearing.

purports to request that the Court alter, modify, or reconsider its November 19, 2008 Memorandum Decision, Goodman v. Cal. Portland Cement Co. (In re GTI Capital Holdings, L.L.C.), 399 B.R. 247 (Bankr. D. Ariz. 2008). However, the Motion simply attaches unrelated pleadings and presents no basis, in fact or law, for the Court to act. In essence, the Plaintiffs have presented no request for relief. The Defendants also point out that to the extent the Motion is a motion for reconsideration, it was untimely filed.

With respect to the December 22, 2008 motion, the bankruptcy court found that it

appears to relate to an order granting an award of attorneys' fees to Empire Southwest LLC, dated December 19, 2008. Once again the documents attached to the Motion seem to have no relation to the award of attorneys' [*13] fees. To the extent that the Plaintiffs are questioning this Court's November 19, 2008 Memorandum Decision, the Plaintiffs have set forth no basis for this Court to alter, amend, or reconsider that Decision. The Plaintiffs have requested no affirmative relief from the Court that may be discerned. The Court agrees with the Defendants' position that this Motion should be denied.

With respect to the December 23, 2008 motion, the court found:

The Plaintiffs appear to question the Court's denial of the Plaintiffs' motion to disqualify, by minute entry order, but have set forth no basis as to why their motion should be granted other than they do not like the Court's decisions. However, as noted in the Court's decision and minute entry order denying the motion to disqualify, a party's displeasure with a court's decision is not a basis to disqualify the judge presiding over the matter. The Plaintiffs also attach the complaints filed in the Arizona state court, but there is no analysis as to how those complaints relate to the issues that the Court was hearing on December 9, 2008. The Plaintiffs have set forth no basis to grant them any type of affirmative relief. The Court agrees with the Defendants' [*14] position that this Motion should be denied.

The court denied all three motions in its Order Denying Motions to Alter/Amend Judgment entered on February 5, 2009. Appellants timely appealed that order.

II. JURISDICTION

At the time the bankruptcy court granted the expense requests of Carmel, Empire and Comerica under Rule 37(a)(5)(B),

2009 Bankr. LEXIS 4539, *10

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Appellants had voluntarily withdrawn the Independent Actions in the state court and the bankruptcy court had dismissed the consolidated adversary proceedings at issue in this appeal. The dismissal, however, did not deprive the court of jurisdiction to consider the parties' Rule 37 expense requests. Willy v. Coastal Corp., 503 U.S. 131, 135-39, 112 S. Ct. 1076, 117 L. Ed. 2d 280 (1992); Cooter & Gell, 496 U.S. 384, 110 S. Ct. 2447, 110 L. Ed. 2d 359 (1990).

We have jurisdiction under 28 U.S.C. § 158.

III. ISSUES

A. Whether the bankruptcy court abused its discretion in denying Appellants' Motions to Alter/Amend Judgment filed on December 19, 22 and 23, 2008.

B. Whether the bankruptcy court erred as a matter of law in concluding that it had jurisdiction after dismissal of the Independent Actions to award expenses under Rule 37(a)(5)(B).

C. Whether the bankruptcy court abused its discretion in awarding Empire its expenses under Rule 37(a)(5)(B).

D. [*15] Whether the bankruptcy court abused its discretion in denying Appellants' Motion to Disqualify.

IV. STANDARD OF REVIEW

HN2[ ] We review the bankruptcy court's decision to deny a motion to alter or amend a judgment or for reconsideration under the abuse of discretion standard. Arrow Elecs., Inc. v. Justus (In re Kaypro), 218 F.3d 1070, 1073 (9th Cir. 2000).

HN3[ ] The existence of the bankruptcy court's jurisdiction is a question of law subject to de novo review. Reebok Int'l, Ltd. v. Marnatech Enters., 970 F.2d 552, 554 (9th Cir. 1992).

HN4[ ] A trial judge's decision, which declines a recusal request, is reviewed for an abuse of discretion. Am. Express Travel Related Servs. Co. v. Fraschilla (In re Fraschilla), 235 B.R. 449, 453 (9th Cir. BAP 1999).

HN5[ ] An award for fees and costs pursuant to Rule 37 is also reviewed for an abuse of discretion. Marchand v. Mercy Med. Ctr., 22 F.3d 933, 936 (9th Cir. 1994). "A court abuses its discretion when it bases its decision on an erroneous conclusion of law or when the record contains no evidence on which it could rationally base its decision." United States v. Prairie Pharmacy, Inc., 921 F.2d 211, 212 (9th Cir. 1990).

V. DISCUSSION

A. Jurisdiction and Scope of Appeal

We address [*16] first the scope of our jurisdiction in this appeal.11 The order attached to the NOA was the bankruptcy court's Order Denying Motions to Alter/Amend Judgment, but the NOA designates the orders appealed from as Civil Contempt Orders. Even if we were to treat the three orders awarding fees and costs to Carmel, Empire and Comerica under Rule 37 as civil contempt orders, we conclude that the scope of our review in this appeal concerns only Empire's order.

Appellants and Carmel settled the expense award and other claims by agreement dated February 18, 2009.

Comerica's expense award order is not before us because none of Appellants' Motions to Alter/Amend Judgment filed on December 19, 22 and 23, 2008 related to Comerica's order. Nor could they, because Appellants filed their three Motions to Alter/Amend Judgment prior to the entry of Comerica's order on January 7, 2009. HN7[ ] Rules 59 and 60 both require a motion "after entry of judgment". Our review of the docket shows that Appellants did not present a written motion to the court under either rule after entry of Comerica's order on January 7, 2009. Comerica's order thus became a final, non-appealable order, and we do not have jurisdiction to review it. Wiersma v. Bank of the West (In re Wiersma), 483 F.3d 933, 937 (9th Cir. 2007) (HN8[ ] "[T]he failure to timely file a notice of appeal is a jurisdictional defect barring appellate review.").12

11 The caption used in the NOA is different from the caption in the Order Denying Motions to Alter/Amend Judgment. The NOA shows Triad Commercial Captive Co., Stirling Bridge, LLC, and New York-Newport Assurance Co. as appellants. These entities lack standing under the "person aggrieved" test for appellate standing set forth in Fondiller v. Robertson (In re Fondiller), 707 F.2d 441, 443

(9th Cir. 1983) (HN6[ ] appellate standing requires that a party must demonstrate that it is directly and adversely pecuniarily affected by the order at issue). None of these entities was liable for attorneys' fees and costs to Empire. The proper party Appellants are named in the caption in the Order Denying Motions to Alter/Amend Judgment. See Lenders Prot. Group v. USA Commercial Mortgage Co. (In re USA Commercial Mortgage Co.), 369 B.R. 587, 595 (D. Nev. 2007) [*17] (naming parties in a document that is "functionally equivalent" to the NOA meets the Rule 8001(a) requirement that the NOA contain the names of all parties to the judgment, order, or decree appealed from).

12 The only substantive appellee brief we received was [*18] filed by Comerica, later joined by Empire. This issue was not raised by Comerica. Although Comerica's order is not before us, we conclude that Comerica had standing to file its brief and appear because Appellants raised the issue of the court's postdismissal jurisdiction to

2009 Bankr. LEXIS 4539, *14

Page 9 of 11

We also do not consider the court's denial of Appellants' Motion to Disqualify or their related Motion to Alter/Amend Judgment. In the section entitled "Issues Presented" of Appellants' opening brief, Appellants do not mention this order. Nor do Appellants assign error or make any arguments with respect to the court's ruling on the Motion to Disqualify or its denial of their Motion to Alter/Amend that order. Accordingly, we consider this ground for appeal waived. See Kim v. Kang, 154 F.3d 996, 1000 (9th Cir. 1998).13

B. The Bankruptcy Court Did Not Abuse Its Discretion In Granting Empire's Rule 37 Expense Request

Having explained in detail what this appeal does not involve, we now proceed to the narrow issues presented — whether the court had post-dismissal jurisdiction over Empire's Rule 37 expense request and, if so, whether the court abused its discretion in granting the request.

At the outset, we observe that Appellants offered no arguments in their opening brief as to why the bankruptcy court abused its discretion in denying their Motion to Alter/Amend Judgment which related to the December 19, 2008 order awarding Rule 37 expenses to Empire. Nor does our review of the record show that Appellants presented any coherent theory to the bankruptcy court which explained why they were substantially justified in bringing their Motion to Compel. Appellants did not address the standards under Rule 37 in the bankruptcy court either in their pleadings or orally since Goodman left the hearing prior to the court's ruling.

Instead, Appellants advanced vague and rambling arguments addressing standards under contempt which they raise again in their opening brief. They complain that the [*20] bankruptcy court never identified or made findings that Goodman intentionally, or even negligently, breached a court order. However, as the bankruptcy court explained, the Rule 37 expense awards were not based on contempt, making the standards for contempt inapplicable. See Hyde & Drath v. Baker, 24 F.3d 1162, 1171 (9th Cir. 1994) (HN9[ ] a finding of bad faith is not required for sanctions under Rule 37).

Appellants also challenge the court's removal (or subject

make the awards to Carmel, Empire and Comerica. It was this jurisdiction which allowed the court to award Comerica Rule 37 expenses. Hence, reversal on this issue could void the Comerica award and Comerica is accordingly a party aggrieved.

13 Appellants raised several additional issues in their Statement of Issues on Appeal which were not addressed in their opening brief. These issues we also do not consider. [*19] See Kim, 154 F.3d at 1000.

matter) jurisdiction over the Independent Actions by delving into how the Settlement between the trustee and Comerica should be interpreted. But issues relating to the Settlement are not before us in this appeal, and the Independent Actions have been dismissed. Therefore, any question regarding the court's subject matter jurisdiction over the merits of the Independent Actions has been rendered moot by Appellants' voluntary withdrawal of the complaints because there is no longer any case or controversy before the court.14

Appellants have contested the bankruptcy court's subject matter jurisdiction over the Independent Actions throughout these proceedings. However, HN10[ ] well-developed case law makes clear that a court's authority to award sanctions is not dependent on the court's subject matter jurisdiction. Willy, 503 U.S. at 135-39 (award of sanctions is collateral to underlying merits); Orange Prod. Credit Ass'n v. Frontline Ventures Ltd., 792 F.2d 797, 801 (9th Cir. 1986) ("[T]he fact the district court lacked jurisdiction to consider the merits of the case [does] not preclude it from imposing sanctions."). Nor does Appellants' voluntary withdrawal of the Independent Actions mean the court lost its power to proceed. Rather, whether the court should impose sanctions for abuse of the judicial process is a collateral matter that may be determined after the suit has terminated. Cooter & Gell, 496 U.S. at 395-96.

One court explained [*22] that "'[j]urisdiction' is an all-purpose word denoting adjudicatory power. A court may have power to do some things but not others, and the use of 'lack of jurisdiction' to describe the things it may not do does not mean that the court is out of business." Szabo Food Serv., Inc. v. Canteen Corp., 823 F.2d 1073, 1077 (7th Cir. 1987).

Here, Appellants put the court's subject matter jurisdiction at issue in their Motion to Remand. HN11[ ] It is well-settled that a trial court has jurisdiction to determine its jurisdiction. United States v. United Mine Workers, 330 U.S. 258, 292 n.57, 67 S. Ct. 677, 91 L. Ed. 884 (1947). Further, the court may allow discovery to aid in determining whether it has subject matter jurisdiction. Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 430 n.24 (9th Cir. 1977). It follows then that a court has the power to supervise that

14 Because this appeal deals only with the Rule 37 expense awards, which the court made after Appellants' voluntary dismissal of the Independent Actions, we need not reach the broader question whether the bankruptcy [*21] court had subject matter jurisdiction to hear the merits of the adversary proceedings. The court's ruling regarding its post-dismissal jurisdiction was also not a final order, but a preliminary ruling that was necessary before the court made its decision to award expenses under Rule 37.

2009 Bankr. LEXIS 4539, *18

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discovery and award expenses authorized under Rule 37 for any discovery abuse that occurs.

Although Willy, Cooter and Orange arose in the Rule 11 context, we conclude their jurisdictional holdings and reasoning extend to the Rule 37 expense awards because the awards were collateral matters which did not involve an adjudication of the underlying merits. Therefore, [*23] regardless of whether the court had subject matter jurisdiction over the merits, we hold that the bankruptcy court had jurisdiction to remedy Appellants' violation of the discovery rules after their voluntary withdrawal of the Independent Actions. Thus the court did not abuse its discretion when it amended the dismissal order to retain jurisdiction for the limited purpose of deciding the Rule 37 expense requests.

Having established that the bankruptcy court had post-dismissal jurisdiction, we next review under the abuse of discretion standard the merits of the court's award to Empire. HN12[ ] Since the court denied Appellants' Motion to Compel, Rule 37(a)(5)(B) requires that Appellants pay Empire's expenses incurred in opposing the motion unless the court finds that the motion was substantially justified or other circumstances would make an award of expenses unjust. Appellants had the burden of establishing substantial justification and special circumstances. Hyde & Drath, 24 F.3d at 1171. They failed to meet that burden.

Appellants argue that they properly sought to conduct jurisdictional discovery by motion and that the court granted their request in the Scheduling Order which stated:

The Court [*24] has also considered the request by the Goodman parties to conduct discovery. The Court will allow, at this time, whatever discovery is appropriate and consistent with the Federal Rules of Civil Procedure and the Federal Rules of Bankruptcy Procedure.

Appellants infer that the court abused its discretion by awarding expenses because they were simply complying with the court's order. However, even if we accept Appellants' belief that jurisdictional discovery was authorized by the Scheduling Order, the manner in which they conducted the discovery was clearly not contemplated by the court's order, nor was their failure to follow the discovery rules excused.

The court's authorization for discovery did not bless the requested discovery on the attorneys, and there is nothing in the order that authorized discovery on an expedited basis. Nevertheless, Appellants proceeded on an expedited schedule and did not follow the rules.

Appellants never met and conferred with the various parties

as required under Rule 26(f) to determine how best to proceed with the discovery on jurisdiction.15 The record supports the court's findings that Appellants by passed the meet and confer requirement and immediately [*25] proceeded to schedule numerous depositions and require the turnover of documents on an expedited schedule. They served subpoenas electronically on the night of August 10, 2008 requesting several parties to appear for depositions and bring documents for their review.

Before the parties had an opportunity to respond, Appellants filed their Motion to Compel without complying with HN14[

] Bankruptcy Local Rule 9013-1(e)16 which requires certification that the attorney made sincere efforts to resolve the dispute. In construing a similar local rule, one court emphasized "[t]he purpose of this rule is simple: to lessen the burden on the court and reduce the unnecessary expenditure of resources by litigants, through promotion of informal, extrajudicial resolution of discovery disputes." Nev. Power Co. v. Monsanto Co., 151 F.R.D. 118, 120 (D. Nev. 1993).

HN15[ ] Rule 37(a)(1) also requires that the motion "include a certification that the movant has in good faith conferred or attempted to confer with the person or party failing to make disclosure or discovery in an effort to obtain it without court action." Goodman states in his Motion to Compel that the "plaintiffs endeavored to set consensual depositions on numerous occasions." However, this single statement does not come close to meeting the standards for certification under Rule 37(a)(1).

HN16[ ] [T]wo components are necessary to constitute a facially valid motion to compel. First is the actual certification document. The certification must accurately and specifically convey to the court who, where, how, and when the respective parties attempted to personally resolve the discovery dispute. Second is the performance, which also has two elements. The moving party performs, according to the [*27] federal rule, by certifying that he or she has (1) in good faith (2)

15 HN13[ ] Rule 26(f) requires the parties to confer "as soon as practicable" and consider the "nature and basis of their claims and defenses and the possibilities for promptly settling or resolving the case; . . . ; discuss any issues about discoverable information; and develop a proposed discovery plan." Rule 26(f)(1) and (2). Appellants did not fulfill any of these requirements.

16 District of Arizona Bankr. L. Rule 9013-1(e) [*26] states: "No motion concerning discovery disputes will be considered unless a statement of the moving party or its counsel, if represented, is attached certifying that after personal consultation and sincere efforts to do so, the parties have been unable to resolve the matter."

2009 Bankr. LEXIS 4539, *21

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conferred or attempted to confer. Each of these two subcomponents must be manifested by the facts of a particular case in order for a certification to have efficacy and for the discovery motion to be considered.

Shuffle Master, Inc. v. Progressive Games, Inc., 170 F.R.D. 166, 170 (D. Nev. 1996). The Shuffle Master court further explained that, "[A] moving party must include more than a cursory recitation that counsel have been 'unable to resolve the matter.'" Id. at 171. In short, Appellants' Motion to Compel lacked the necessary Rule 37(a)(1) certification under these standards.

Finally, we cannot discern from this record how any inquiry of the various lawyers would have resolved the subject matter jurisdictional issue. HN17[ ] Discovery of an issue relating to subject matter jurisdiction is appropriate only when additional facts are required to determine whether jurisdiction exists. Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 n.13, 98 S. Ct. 2380, 57 L. Ed. 2d 253 (1978). However, discovery is not necessary or appropriate when it is clear that discovery would not uncover facts providing a basis — or lack thereof — for jurisdiction. Wells Fargo & Co., 556 F.2d at 430 n.24.

Our [*28] review of the record did not uncover any argument or evidence that explained what information the lawyers had which was relevant to the issue of subject matter jurisdiction. It is neither our duty to guess at what those arguments may entail nor develop them to justify Appellants' Motion to Compel.

In sum, Appellants' pleadings in the bankruptcy court did not even address Rule 37(a)(5)(B)'s substantial justification requirement nor did Goodman address it at the hearing. The record is bereft of any intelligible argument as to why the court ruled incorrectly. Appellants were entitled to contest the court's subject matter jurisdiction after removal, but that right did not include ignoring the discovery rules and proceeding on an expedited schedule that was not approved by the bankruptcy court. Once the court denied their Motion to Compel, Appellants' tactical move of dismissing the Independent Actions did not serve to obviate the consequences of their failures to follow the rules.

Accordingly, we hold that based on the record before us, the bankruptcy court's award of fees and costs to Empire under Rule 37(a)(5)(B) was not an abuse of discretion. We also hold that the bankruptcy court did [*29] not abuse its discretion by denying Appellants' Motion to Alter/Amend Judgment dated December 22, 2008 because the motion failed to show that the court clearly erred in rendering the underlying decision. See First Ave. West Bldg., L.L.C. v. James (In re Onecast Media,

Inc.), 439 F.3d 558, 561 (9th Cir. 2006) (stating that HN18[] a court abuses its discretion by denying a motion for

reconsideration if its decision involved clear error).

VI. CONCLUSION

For the reasons stated above, we AFFIRM.

End of Document

2009 Bankr. LEXIS 4539, *26

13

QB\48593538.1

Similar Rules

I. Fed.R.Civ.P. 37(a)(1) (2017).

A motion for an order compelling disclosure or discovery must include a certification that the movant has in good faith conferred or attempted to confer with the person or party failing to make disclosure or discovery in an effort to obtain it without court action.

Fed.R.Civ.P. 37(a)(1) (2017).

Under Fed. R. Civ. P. 37, there is a binding obligation on the parties to confer in good faith, which contemplates "honesty in one's purpose to meaningfully discuss the discovery dispute, freedom from intention to defraud or abuse the discovery process, and faithfulness to one's obligation to secure information without court action." Shuffle Master, Inc. v. Progressive Games, Inc., 170 F.R.D. 166, 171 (D. Nev. 1996).

'"Good faith' is tested by the court according to the nature of the dispute, the reasonableness of the positions held by the respective parties, and the means by which both sides conferred." Shuffle Master at 171. "[T]he parties must present to each other the merits of their respective positions with the same candor, specificity, and support during informal negotiations as during the briefing of discovery motions." Nevada Power Co. v. Monsanto Co., 151 F.R.D. 118, 120 (D. Nev. 1993); also see Whiting v. Hogan, No. 12-CV-08039-PHX-GMS, 2013 U.S. Dist. LEXIS 35381, at *5-6 (D. Ariz. Mar. 14, 2013).

II. Local Rules of Practice of the United States District Court for the District of Arizona 7.2(j) (2017).

(j) Discovery motions. -- No discovery motion will be considered or decided unless a statement of moving counsel is attached thereto certifying that after personal consultation and sincere efforts to do so, counsel have been unable to satisfactorily resolve the matter. Any discovery motion brought before the Court without prior personal consultation with the other party and a sincere effort to resolve the matter, may result in sanctions.

D. Ariz. LRCiv 7.2(j).

But see Morgal v. Jacobs, No. CIV 12-280-TUC-CKJ, 2013 U.S. Dist. LEXIS 190235, at *2 (D. Ariz. July 2, 2013) (where no affidavit, declaration, or certification detailing good faith attempts with opposing counsel to resolve the discovery dispute prior to seeking a judicial resolution of the issue was provided to the court, the court considered the request to compel discovery "because it does not appear that the dispute could have been resolved").

III. 2018 Amendments to Arizona Rules of Civil Procedure (to be effective July 1, 2018). Effective July 1, 2018, Arizona state court discovery disputes will be governed by the following new Rule: 26(d) Expedited Procedure for Resolving Discovery and Disclosure Disputes.

QB\48593538.1

(Amended) Ariz.R.Civ.P.26(d) (2018).

Rule 7.1(h) has not been amended, and provides as follows (similar to the Local

Bankruptcy Rule):

(h) Good Faith Consultation Certificate. When these rules require that a “good faith consultation certificate” accompany a motion or that the parties otherwise consult in good faith, the movant must attach to the motion a separate statement certifying and demonstrating that the movant has tried in good faith to resolve the issue by conferring with--or attempting to confer with--the party or person against whom the motion is directed. The consultation

QB\48593538.1

required by this rule must be in person or by telephone, and not merely by letter or email.

Ariz.R.Civ.P. 7.1(h) (2017).

IV. Local Rules of Practice of the United States District Court for the District of Nevada

26-7 (2017).

Like the Local Bankruptcy Rules in Arizona, the District of Nevada requires a personal effort to meet and confer:

(c) Discovery motions will not be considered unless the movant (1) has made a good faith effort to meet and confer as defined in LR IA 1-3(f) before filing the motion, and (2) includes a declaration setting forth the details and results of the meet-and confer conference about each disputed discovery request.

LR 26-7(c) (D.Nev. (2017)).

Local Rule 190-1(f)(2)1 expressly requires that a discovery motion be accompanied by an affidavit of moving counsel "certifying that, after personal consultation and sincere effort to do so, counsel have been unable to satisfactorily resolve [their dispute]." The purpose of this rule is simple: to lessen the burden on the court and reduce the unnecessary expenditure of resources by litigants, through promotion of informal, extrajudicial resolution of discovery disputes.

Nev. Power Co. v. Monsanto Power Co., 151 F.R.D. 118, 120 (D. Nev. 1993).

The parties must present to each other the merits of their respective positions with the same candor, specificity, and support during informal negotiations as during the briefing of discovery motions. Only after all the cards have been laid on the table, and a party has meaningfully assessed the relative strengths and weaknesses of its position in light of all available information, can there be a "sincere effort" to resolve the matter. Further, to ensure that the parties have made every effort to reach a "satisfactory resolution," judicial intervention should be considered appropriate only when (1) informal negotiations have reached an impasse on the substantive issue in dispute, or (2) one party has acted in bad faith, either by refusing to engage in negotiations altogether or by refusing to provide specific support for its claims of privilege. See Crown Cork & Seal, Co., Inc. v. Chemed Corp., 101 F.R.D. 105, 106-7 (E.D. Pa. 1984) (discovery disputes should not be referred to the court unless such serious differences exist between counsel that

1 This Rule is the predecessor to the current Nevada Local Rule.

QB\48593538.1

further efforts at negotiation are pointless, or a court ruling is required on a disputed issue of law).

Id., 151 F.R.D. at 120.

In the instant case, Plaintiff's Motion to Compel was accompanied by counsel Merrell's affidavit that, "after personal consultation and sincere effort," the parties were unable to resolve the privilege issue. However, by Merrell's own admission, the parties' "sincere efforts" to resolve their dispute consisted entirely of a single discussion during the November 23, 1992 meeting, at which time it was agreed only that Defendants would "look into" the matter and contact Plaintiff. At no time prior to the filing of Plaintiff's motion did Defendants inform plaintiff of the nature of the documents they were withholding under claim of privilege, or present Plaintiff with a specific basis for their claims of privilege. Nor did Plaintiff expressly request privilege logs from any of the defendants. In short, no party pursued the matter after the November 23, 1992 meeting, and no substantive discussions were ever conducted on the privilege issue. Given the dearth of meaningful dialogue on the privilege issue, it is apparent that, contrary to the averments of plaintiff's counsel, the parties have not even begun to make a "sincere effort" to resolve the privilege dispute amongst themselves.

Id., 151 F.R.D. at 120-21.

14

PositiveAs of: October 1, 2017 7:39 PM Z

Nevada Power Co. v. Monsanto Power Co.

United States District Court for the District of Nevada

September 20, 1993, Decided ; September 20, 1993, Filed, Entered

CV-S-89-555-LDG (LRL)

Reporter151 F.R.D. 118 *; 1993 U.S. Dist. LEXIS 17584 **

NEVADA POWER COMPANY, Plaintiff, v. MONSANTO COMPANY, GENERAL ELECTRIC COMPANY and WESTINGHOUSE ELECTRIC CORP., Defendants.

Core Terms

privilege log, documents, discovery, parties, informal, claim of privilege, Electric, discovery dispute, sincere effort, negotiations, withholding

Case Summary

Procedural PosturePlaintiff state power company filed a motion to compel production of purportedly privileged documents in an action against defendants electric companies, claiming that defendants failed to warn plaintiff of the known health and environmental dangers of polychlorinated biphenyls.

OverviewDefendant electric companies sold electrical equipment containing polychlorinated biphenyls (PCBs) to plaintiff state power company. Plaintiff brought an action against defendants, claiming that defendants failed to warn plaintiff of the known health and environmental dangers of PCBs. In the course of discovery, defendants refused to produce documents under claims of attorney-client privilege and the work product doctrine. Plaintiff filed a motion to compel production of purportedly privileged documents, arguing that defendants waived their claims of privilege by failing to timely provide plaintiff with privilege logs. The court noted that plaintiff failed to request the privilege logs. Thus, the court found that the parties did not make a "sincere effort" to resolve the privilege dispute amongst themselves. The court held that the matter was not ripe and that the motion to compel would not be entertained until a demand for production was properly made by plaintiff.

Outcome

The court refused to entertain a motion to compel production of purportedly privileged documents by plaintiff state power company in an action against defendant electric companies. The court held that the motion was not ripe because plaintiff failed to demand production of the privilege logs prior to filing the motion to compel.

LexisNexis® Headnotes

Civil Procedure > ... > Discovery > Misconduct During Discovery > Motions to Compel

HN1[ ] Misconduct During Discovery, Motions to Compel

U.S.D.C., D. Nev., L.R. 190-1(f)(2) provides that discovery motions will not be considered unless a statement of moving counsel is attached thereto certifying that, after personal consultation and sincere effort to do so, counsel have been unable to satisfactorily resolve the matter.

Civil Procedure > ... > Discovery > Misconduct During Discovery > Motions to Compel

Civil Procedure > Discovery & Disclosure > General Overview

HN2[ ] Misconduct During Discovery, Motions to Compel

U.S.D.C., D. Nev., L.R. 190-1(f)(2) expressly requires that a discovery motion be accompanied by an affidavit of moving counsel certifying that, after personal consultation and sincere effort to do so, counsel have been unable to satisfactorily resolve their dispute.

Page 2 of 4

Civil Procedure > ... > Discovery > Misconduct During Discovery > Motions to Compel

HN3[ ] Misconduct During Discovery, Motions to Compel

Inherent in U.S.D.C., D. Nev., L.R. 190-1(f)(2)'s language, and essential to the Rule's proper operation, is the requirement that parties treat the informal negotiation process as a substitute for, and not simply a formalistic prerequisite to, judicial resolution of discovery disputes.

Judges: [**1] LEAVITT

Opinion by: LAWRENCE R. LEAVITT

Opinion

[*119] AMENDED ORDER

In the 1960's and 1970's, Defendants General Electric and Westinghouse Electric sold to Plaintiff certain electrical equipment containing polychlorinated biphenyls (PCBs) which had been produced by Defendant Monsanto. In this action Plaintiff claims that Defendants were aware of the health and environmental dangers of PCBs at the time Plaintiff purchased the electrical equipment, yet failed to inform Plaintiff of those dangers. Plaintiff seeks recovery of the cost of complying with Environmental Protection Agency regulations mandating the replacement of some of the PCB-laden electrical equipment.

The parties have engaged in lengthy discovery, which has generated numerous disputes. The dispute presently before the Court arises out of Defendants' refusal to produce documents under claims of attorney/client privilege and the work product doctrine. Plaintiff has filed a Motion to Compel Production of Purportedly Privileged Documents (#256), in which Plaintiff contends that because Defendants have asserted only general, unsubstantiated objections to Plaintiff's discovery requests, they have waived their claims of privilege.

PROCEDURAL BACKGROUND

[**2] On September 2 and 11, 1992, Plaintiff propounded interrogatories, requests for admission and requests for production of documents on all Defendants. Defendants asserted general privilege objections and withheld some 350

purportedly privileged documents. 1

HN1[ ]

Local Rule of Practice 190-1(f)(2) for the United States District Court for the [**3] District of Nevada provides:

Discovery motions will not be considered unless a statement of moving counsel is attached thereto certifying that, after personal consultation and sincere effort to do so, counsel have been unable to satisfactorily resolve the matter.

Pursuant to the Rule's "meet and confer" requirement, the parties met on November 23, 1992, to discuss outstanding discovery disputes. Paul E. Merrell, counsel for Plaintiff, claims he informed Defendants' counsel at the meeting that Defendants' general privilege objections were legally insufficient because they did not adequately identify those documents Defendants sought to withhold from discovery. Defendants' counsel promised to look into the matter and report back [*120] to Merrell, but did not do so. When he didn't hear from Defendants' counsel for almost two months, Plaintiff's counsel filed the instant motion.

DISCUSSION

Plaintiff's principal contention is that Defendants have waived their claims of privilege by failing timely to provide Plaintiff with privilege logs or affidavits in support of their general privilege objections. It is uncontroverted that Defendants didn't produce privilege logs until February 12, [**4] 1993, the same day on which they filed their Opposition to Plaintiff's motion. 2

1. Parties' Duty Meaningfully to Meet and Confer

1 As an example, Defendant Monsanto's Response to Plaintiff's Request for Production of Documents and Things states, in the section entitled "General Objections and Limitations," that

1. Monsanto objects to any and all requests for production of documents to the extent that they seek the production of documents protected from discovery by any privilege including the attorney-client privilege and/or the work product privilege. No such privileged or protected document will be produced or disclosed. . . .

* * *

10. These "General Objections and Limitations" are applicable to and incorporated in each of Monsanto's responses, infra, as if specifically set forth therein. . . .

2 Defendants have not submitted affidavits in support of their claims of privilege. However, this Court does not ordinarily require such affidavits.

151 F.R.D. 118, *118; 1993 U.S. Dist. LEXIS 17584, **17584

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HN2[ ] Local Rule 190-1(f)(2) expressly requires that a discovery motion be accompanied by an affidavit of moving counsel "certifying that, after personal consultation and sincere effort to do so, counsel have been unable to satisfactorily resolve [their dispute]." The purpose of this rule is simple: to lessen the burden on the court and reduce the unnecessary expenditure of resources by litigants, through promotion of informal, extrajudicial resolution of discovery disputes. 3 Tarkett, Inc. v. Congoleum Corp., 144 F.R.D. 282, 285-86 (E.D. Pa. 1992); Dondi Properties Corp. v. Commerce Savings & Loan Assoc. et al., 121 F.R.D. 284, 289 (N.D. Tex. 1988) ("the purpose of the conference [**5] requirement is to promote a frank exchange between counsel to resolve issues by agreement or to at least narrow and focus the matters in controversy before judicial resolution is sought").

HN3[ ] Inherent in Rule 190-1(f)(2)'s language, and essential to the Rule's proper operation, is the requirement that parties treat the informal negotiation process as a substitute for, and not simply a formalistic prerequisite to, judicial resolution of discovery disputes. See Tarkett, 144 F.R.D. at 285. See also Dondi, 121 F.R.D. at 289 (noting that "in many instances the conference requirement seems to have evolved into a pro forma matter"). To that end, the parties must present to each other the merits of their respective positions with the same candor, specificity, and support during informal negotiations [**6] as during the briefing of discovery motions. Only after all the cards have been laid on the table, and a party has meaningfully assessed the relative strengths and weaknesses of its position in light of all available information, can there be a "sincere effort" to resolve the matter. Further, to ensure that the parties have made every effort to reach a "satisfactory resolution," judicial intervention should be considered appropriate only when (1) informal negotiations have reached an impasse on the substantive issue in dispute, or (2) one party has acted in bad faith, either by refusing to engage in negotiations altogether or by refusing to provide specific support for its claims of privilege. See Crown Cork & Seal, Co., Inc. v. Chemed Corp., 101 F.R.D. 105, 106-7 (E.D. Pa. 1984) (discovery disputes should not be referred to the court unless such serious differences exist between counsel that further efforts at negotiation are pointless, or a court ruling is required on a disputed issue of law).

In the instant case, Plaintiff's Motion to Compel was accompanied by counsel Merrell's affidavit that, "after

3 In this manner the Local Rule furthers the policy of Federal Rule of Civil Procedure 1, which encourages "the just, speedy, and inexpensive determination of every action."

personal consultation and sincere effort," the [**7] parties were unable to resolve the privilege issue. However, by Merrell's own admission, the parties' "sincere efforts" to resolve their dispute consisted entirely of a single discussion during the November 23, 1992 meeting, at which time it was agreed only that Defendants would "look into" the matter and contact Plaintiff. At no time prior to the filing of Plaintiff's motion did Defendants inform plaintiff of the nature of the documents they were withholding under claim of privilege, or present Plaintiff with a specific basis for their claims of privilege. Nor did Plaintiff expressly request privilege logs from any of [*121] the defendants. 4 In short, no party pursued the matter after the November 23, 1992 meeting, and no substantive discussions were ever conducted on the privilege issue. Given the dearth of meaningful dialogue on the privilege issue, it is apparent that, contrary to the averments of plaintiff's counsel, the parties have not even begun to make a "sincere effort" to resolve the privilege dispute amongst themselves.

[**8] 2. Production of Privilege Logs

The issue, then, is what constitutes compliance with the mandate of Rule 190-1(f)(2) where the discovery dispute in question involves the withholding of documents on the basis of privilege. As stated above, a meaningful discussion under Rule 190-1(f)(2) is one in which the parties truly air their respective positions. This requires that the objecting party offer such factual support for its position as will allow the party seeking discovery to make an informed evaluation of the claim with respect to each document. See Eureka Financial Corp. v. Hartford Acc. & Indem. Co., 136 F.R.D. 179, 183 (E.D. Cal. 1991) (party claiming privilege must provide party seeking discovery with the basis for contesting the claim). The most meaningful way to accomplish this is through the production of a detailed privilege log. The Court therefore holds that where documents are withheld on the basis of privilege, the party seeking discovery must, in order to meet the requirements of Rule 190-1(f)(2), be given an opportunity to review a detailed privilege log with respect to each withheld document. 5 The privilege logs must be

4 Defendants have submitted the affidavit of Peggy Leen, counsel for Westinghouse Electric Corporation and Monsanto Company, in which Leen states that she has reviewed all relevant correspondence files and personal notes of communications with Plaintiff's counsel, and has been unable to find any evidence that Plaintiff's counsel ever requested a privilege log from Defendants. Leen further states that "at no time during this November 23, 1992 meeting among counsel did counsel for plaintiff request production of a privilege log from defendants." These statements are unchallenged by Plaintiff.

5 The privilege logs must be sufficiently detailed to allow informed

151 F.R.D. 118, *120; 1993 U.S. Dist. LEXIS 17584, **4

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produced [**9] reasonably promptly following the completion of document production. If they are not, the party seeking discovery must, as a condition of seeking relief from this Court, demand their production. No discovery motion will be entertained by this Court until such demand has been made. The objecting party's refusal to produce the privilege logs upon demand will constitute sanctionable conduct.

[**10] Not only will the early production of detailed privilege logs foster informal resolution of discovery disputes, it will reduce the number of baseless privilege claims asserted in the first place. As noted in Eureka Financial Corp., supra:

All too often, the blanket privilege is asserted by counsel who have not carefully reviewed the pertinent documents for privilege. In an abundance of caution, counsel withholds documents that are not privileged, thus defeating the full and fair information disclosure that discovery requires.

136 F.R.D. at 183 n.9. By forcing a party to justify its privilege objections shortly after it asserts them, counsel will be required to review documents carefully before withholding them.

Here, Defendants did not produce privilege logs until after Plaintiff had filed its Motion to Compel. Equally importantly, Plaintiff filed the instant motion without first demanding production of the logs. Hence, meaningful attempts to resolve the dispute informally as required by Rule 190-1(f)(2) were foreclosed. Moreover, this Court has been given no reasonable assurance that Defendants carefully considered [**11] the merits of their privilege claims before asserting them. Of the three defendants, only Monsanto has [*122] produced a privilege log satisfying this Court's criteria for specificity and detail. 6 Accordingly, this matter is

evaluation of the objecting party's claims. To that end, this Court will require that privilege logs separately identify each document withheld under claim of privilege, and set forth for each document (1) its type (i.e., letter, memo, notes, etc.), (2) its author, (3) its intended recipients, (4) the names of any other individuals with access to the document, (5) the date of the document, (6) the nature of the claimed privilege (i.e., attorney-client, work-product, etc.), and (7) a brief summary of the subject matter of the document. See In re Grand Jury Investigation, 974 F.2d 1068, 1070 (9th Cir. 1992); Allendate Mutual Ins. Co. v. Bull Data Systems, Inc., 145 F.R.D. 84, 88 (ND. Ill. 1992); Kansas-Nebraska Natural Gas v. Marathon Oil Co., 109 F.R.D. 12, 24 (D. Neb. 1985).

6 General Electric's log does not provide the names of intended recipients and others with access to the document, nor does it identify the documents or their subject matter with a reasonable degree of specificity. Westinghouse's log fails to identify those individuals, other than intended recipients, with access to the document.

not ripe for consideration.

For the reasons stated above, and with good cause appearing,

IT IS ORDERED that Plaintiff's Motion to Compel (#256) is denied without prejudice.

DATED this 20th day of September, 1993.

LAWRENCE R. LEAVITT

UNITED STATES MAGISTRATE JUDGE

End of Document

151 F.R.D. 118, *121; 1993 U.S. Dist. LEXIS 17584, **8

15

PositiveAs of: October 1, 2017 7:47 PM Z

Whiting v. Hogan

United States District Court for the District of Arizona

March 14, 2013, Decided; March 14, 2013, Filed

No. 12-CV-08039-PHX-GMS

Reporter2013 U.S. Dist. LEXIS 35381 *; 2013 WL 1047012

Larry Whiting, Leroy Whiting and Lorenzo Garcia, Plaintiff, v. Dana A. Hogan; Clark Moving and Storage, Inc., and Mayflower Transit, LLC, Defendants.

Subsequent History: Motion granted by, in part, Motion denied by, in part Whiting v. Hogan, 2013 U.S. Dist. LEXIS 69604 (D. Ariz., May 16, 2013)

Core Terms

deposition, discovery, parties, questions, deponent, terminated, notice, confer, designate, answers, bad faith, categories, sanctions, preparation, re-opening, matters, telephonically, harassing, inquired, citations, materials, driver, travel, discovery responses, protective order, good faith, deadline, abusive, motion for sanctions, discovery motion

Counsel: [*1] For Larry Whiting, Leroy Whiting, Lorenzo Garcia, Plaintiffs: George Anthony Bleus, LEAD ATTORNEY, Josh E Eden, Bleus & Associates LLC, Albuquerque, NM.

For Dana A Hogan, Mayflower Transit LLC, Clark Moving and Storage Incorporated, Defendants: Carl F Mariano, LEAD ATTORNEY, Lewis Brisbois Bisgaard & Smith LLP - Phoenix, AZ, Phoenix, AZ; Felice Franco Guerrieri, LEAD ATTORNEY, Lewis Brisbois Bisgaard & Smith LLP, Phoenix, AZ.

Judges: G. Murray Snow, United States District Judge.

Opinion by: G. Murray Snow

Opinion

ORDER

Pending before the Court are Plaintiffs' Motion to Re-Open the Deposition of Defendant Dana A. Hogan, Motion for Sanctions for Defendant Hogan's Discovery Abuses, Motion

to Compel Rule 30(b)(6) Depositions of Defendants Mayflower and Clark (Doc. 99), and Defendants' Motion for Sanctions for Failure to Confer in Good Faith (Doc. 105). The Court grants Plaintiffs' Motions to Re-Open and Compel Depositions and denies Plaintiffs' Motion for Sanctions. The Court further grants Defendants' Motion for Sanctions.

BACKGROUND

In April 2012, the Court issued a Joint Case Management Order for this matter setting the deadline for the completion of fact discovery as January 11, 2013. (Doc. 59 ¶ 4.) Plaintiffs noticed [*2] the deposition of Defendant Dana Hogan in August 2012 and the parties agreed to conduct the deposition on October 19, 2012 in Dallas, Texas because of Hogan's trucking schedule. (Doc. 99-2, Ex. 2.) The deposition commenced as planned. After a few hours into testimony, Defendants' counsel, Felice Guerrieri, informed Plaintiffs' counsel, George Bleus, that he would need to leave at 5 p.m. to travel back to the East coast but offered to continue the deposition at a later date if necessary. (Doc. 105-2, Ex. 13 at 82.) As the deposition proceeded, Guerrieri objected to Bleus' lines of inquiry, arguing on the record that they were repetitive, abusive and wasteful. Bleus argued that his lines of inquiry were relevant and subsequently contacted the Court to clarify the permissibility of his questioning. The Court found that the line of questioning that the Plaintiff insisted on pursuing relating to who drafted Defendants' discovery responses was meritless and/or protected by the attorney-client privilege and work-product immunity. Defendants suspended Hogan's deposition at 5 p.m. and opposed a continuance but did not move for a protective order. (Doc. 99-2, Exs. 6, 6-c.)

Over the next several [*3] weeks, the parties exchanged correspondence asserting several areas of disagreement regarding discovery including re-opening Hogan's deposition, noticing Fed. R. Civ. P. 30(b)(6) depositions of Defendants Mayflower and Clark, taking three depositions of current and former Mayflower employees who were not listed as witnesses nor designated as 30(b)(6) deponents, various

Page 2 of 10

document production issues, and the necessity of extending the fact discovery deadline. On November 13, 2012, while the parties had not yet personally conferred, Bleus informed Guerrieri that he had contacted the Court to set up a teleconference in order to resolve the disputes. (Doc. 105-1, Ex. 6.) The Court held a teleconference on November 29, 2012 and ordered the parties to provide supplemental briefing regarding the discovery disputes. (Doc. 95.)

DISCUSSION

I. LEGAL STANDARD

A district court enjoys broad discretion in controlling discovery. Harper v. Betor, 95 F.3d 1157 (9th Cir. 1996) (internal citation omitted). The scope of discovery is governed by Rule 26, which allows "discovery regarding any nonprivileged matter that is relevant to any party's claim or defense." Fed. R. Civ. P. 26(b)(1). Relevance is construed [*4] broadly to encompass any matter that bears on, or that reasonably could lead to other matter that bears on, any issue that is or may be in the case. See id.; Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351, 98 S. Ct. 2380, 57 L. Ed. 2d 253 (1978) (internal citation omitted). Further, "[f]or good cause, the court may order discovery of any matter relevant to the subject matter involved in the action." Fed. R. Civ. P. 26(b)(1). District courts also have broad discretion in determining relevance for discovery purposes. Hallett v. Morgan, 296 F.3d 732, 751 (9th Cir. 2002). Even relevant discovery may be limited, however, if:

(i) the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive; (ii) the party seeking discovery has had ample opportunity to obtain the information by discovery in the action; or (iii) the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.

Fed. R. Civ. P. 26(b)(2)(C).

If a [*5] requested disclosure is not made, the requesting party may move for an order compelling such disclosure, and such a motion must include a certification that the movant has made good faith efforts to obtain the requested disclosure or discovery without court action. Fed. R. Civ. P. 37(a)(1). The party who resists discovery has the burden to show that discovery should not be allowed, and has the burden of clarifying, explaining, and supporting objections. Cable & Computer Tech., Inc. v. Lockheed Sanders, Inc., 175 F.R.D. 646, 650 (C.D. Cal. 1997).

II. GOOD FAITH CONFERENCE

Defendants contend that Plaintiffs' omnibus discovery motion should be denied because they have not made a good faith effort to confer in order to resolve this discovery dispute as required by Local Rule 7.2(j). The Rule states that "[a]ny discovery motion brought before the Court without personal consultation with the other party and a sincere effort to resolve the matter, may result in sanctions" and requires the moving party to attach a certification that such an effort was made. Under Fed. R. Civ. P. 37, there is a similarly binding obligation on the parties to confer in good faith which contemplates "honesty in [*6] one's purpose to meaningfully discuss the discovery dispute, freedom from intention to defraud or abuse the discovery process, and faithfulness to one's obligation to secure information without court action." Shuffle Master, Inc. v. Progressive Games, Inc., 170 F.R.D. 166, 171 (D. Nev. 1996). '"Good faith' is tested by the court according to the nature of the dispute, the reasonableness of the positions held by the respective parties, and the means by which both sides conferred." Id. "[T]he parties must present to each other the merits of their respective positions with the same candor, specificity, and support during informal negotiations as during the briefing of discovery motions." Nevada Power Co. v. Monsanto Co., 151 F.R.D. 118, 120 (D. Nev. 1993).

Defendants contend that Plaintiffs' counsel did not make a sincere effort to resolve their discovery dispute before procuring the Court's intervention. Plaintiffs do not attach a separate certification to their discovery motion, as required by Local Rule 7.2(j), but state that "[a]s the [*7] parties have attempted to confer in good faith with regard this matter, it became reasonably apparent that this matter would necessitate Court intervention." (Doc. 99 at 6.) Plaintiffs assert that following the suspension of Defendant Hogan's deposition on October 19, 2012, they requested further dates for a re-opening of the same but they were met with continued opposition. (Id.) However, the record reveals that Plaintiffs were obstinate in their discovery demands and sparing in genuine efforts to confer. After Hogan's deposition, the parties had several e-mail exchanges in which Guerrieri made offers to confer telephonically. (Doc. 105-1, Exs. 3 (10/29/12), 4 (10/29/12), 5 (11/2/12), 7 (11/9/12), 8 (11/9/12), 9 (11/13/12), 11 (11/15/12).) Bleus did not schedule a call during one of the multiple time slots that Guerrieri provided nor did he offer another convenient time. Instead, he made a few unannounced (and unsuccessful) phone calls to Guerrieri, one of which was at a time when he was informed Guerrieri would be out of the office. (Id., Exs. 4, 8, 11.) Thus Bleus failed to genuinely pursue "personal consultation" with Guerrieri to resolve the dispute.

2013 U.S. Dist. LEXIS 35381, *3

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In the e-mail exchanges with [*8] Guerrieri, Bleus staked out firm positions as to four areas of disagreement providing justification or legal bases for those positions. First, although Guerrieri opposed re-opening Hogan's deposition, he offered to discuss the topics that remained to be covered. (Id., Ex. 3.) Bleus refused to discuss the necessity of re-opening and instead stated "[p]lease advise wether [sic] you will produce Defendant Hogan or if [I] will have to seek Court intervention." (Doc. 99-2, Ex. 7-a.) Bleus also demanded that the second deposition take place in New Mexico rather than consider any other location because "the Defendant's [sic] in this matter have ample resources in order to accomplish any task or deadline, whether it be taking or attending depositions." (Doc. 105-1, Ex. 10.) Second, on November 1, 2012, Plaintiffs had requested 30(b)(6) depositions of Defendants Mayflower and Clark listing broad categories such as "company policy and procedure(s)", "driver training", and "company hiring practices." (Doc. 99-7, Ex. 51.) On November 9, 2012, Guerrieri requested Bleus to clarify those categories to decide who should testify as a party representative. (Id., Ex. 52.) Instead of discussing the categories, [*9] Blues responded: "I have utilized the very same correspondence . . . in every single case involving a requested deposition for a 30(b)(6) company deponent. It has passed muster every time." (Doc. 105-1, Ex. 10.) Third, Guerrieri asked Bleus to explain why four Mayflower employees' depositions, which were not designated as Rule 30(b)(6) deponents, were discoverable in order to provide a stipulation to the same. (Id., Ex. 5.) Bleus replied that the reason should be "crystal clear and does not need to be further articulated" besides his assertion that they "are essential to proving Plaintiff's [sic] claim against the two Defendant companys [sic]." (Id., Ex. 10.) Fourth, Bleus refused to discuss Guerrieri's offer to extend the discovery deadline of January 11, 2013 in light of the several additional depositions that Bleus wanted to conduct in the remaining two holiday months. (Id.)

It is evident from these exchanges that Plaintiffs did not present to Defendants the merits of their positions with nearly the same candor and specificity they provide in their discovery motion to the Court. See Nevada Power, 151 F.R.D. at 120. Bleus did not make an effort to personally consult with Guerrieri [*10] although he had many opportunities to do so, and did not seem open to a mutually agreeable resolution to the issues. In fact, while Guerrieri's offer to personally consult on these matters was pending, Bleus unilaterally contacted the Court on November 9, 2012 to request a telephonic conference and seek the Court's intervention to resolve the dispute. (Doc. 105-1, Ex. 6.) Bleus concluded that "[w]hile [I] have numerous and detailed emails from you regarding every issue to be addressed, as far as [I] am concerned, we have conferred in good faith - as your

positions are detailed and crystal clear." (Id.) Plaintiffs were mistaken that simply staking out their positions through email exchanges constitutes a sincere effort to meet and confer. Further, the Court cautioned in its Case Management Order that the parties "shall not contact the Court concerning a discovery dispute or motion for sanctions without first seeking to resolve the matter" pursuant to Local Rule 7.2(j). (Doc. 59 ¶ 6(b).) Indeed, Guerrieri immediately warned Bleus that by contacting the Court for a telephonic conference, he was in violation of the Order because the parties had not had a personal consultation. Guerrieri [*11] once again offered to confer telephonically during multiple time slots. (Doc. 105-1, Exs. 7, 8.) Instead of scheduling a time to confer with Guerrieri, Bleus once again contacted the Court on November 13, 2012 to confirm a specific time for the teleconference. (Id., Ex. 9.)

District courts retain broad discretion to control their dockets and in the exercise of that power they may impose sanctions. Adams v. Cal. Dept. of Health Servs., 487 F.3d 684, 688 (9th Cir. 2007) (citing Thompson v. Hous. Auth. of City of Los Angeles, 782 F.2d 829, 831 (9th Cir. 1986) (per curiam)). Further, "a court certainly may assess sanctions against counsel who willfully abuse judicial processes." Fink v. Gomez, 239 F.3d 989, 992 (9th Cir. 2001) (internal citations, quotations, and alterations omitted). Before awarding sanctions under its inherent powers, however, the court must make an explicit finding that counsel's conduct constituted or was tantamount to bad faith. Primus Auto. Fin. Servs., Inc. v. Batarse, 115 F.3d 644, 648 (9th Cir. 1997) (internal citations omitted). Plaintiffs' counsel failed to confer in good faith with Defense counsel and his obstinate approach constituted bad faith under the circumstances. [*12] Accordingly, Plaintiff's counsel will be required to personally pay Defendants' reasonable attorneys' fees incurred in attending the teleconference with the Court and responding to Plaintiffs' omnibus discovery motion, pursuant to Local Rule 7.2(j). Plaintiff's counsel is further prohibited from billing his client for the above amount or from, in any way, deducting it from any amount he may recover on behalf of his client. Plaintiffs' counsel is further ordered to provide a copy of this order to his clients and fully explain it to them. The Court will, however, rule on the merits of Plaintiffs' motion in order to resolve the pending discovery disputes.

III. RE-OPENING DEFENDANT HOGAN'S DEPOSITION

Plaintiffs argue that because Guerrieri terminated Defendant Hogan's deposition before the presumptive durational limit of seven hours, Plaintiffs should be allowed to reopen the deposition to complete their questioning. See Fed. R. Civ. P. 30(d)(1) ("Unless otherwise stipulated or ordered by the court,

2013 U.S. Dist. LEXIS 35381, *7

Page 4 of 10

a deposition is limited to 1 day of 7 hours."); (Doc. 59 ¶ 3.) "The court must allow additional time consistent with Rule 26(b)(2) if needed to fairly examine the deponent or if the deponent, [*13] another person, or any other circumstance impedes or delays the examination." Fed. R. Civ. P. 30(d)(1). After beginning Hogan's deposition around 10 a.m. on October 19, 2012 in Dallas, Texas, Guerrieri ended the deposition at 5 p.m., citing that he had to catch an early flight home. At the time Guerrieri terminated the deposition, the court reporter noted that four hours and forty two minutes (4:42) had been used on the record, which is two hours and eighteen minutes (2:18) less than the presumptive limit of seven hours. (Doc. 105-2, Ex. 13 at 294.)

Plaintiffs contend that they noticed Hogan's deposition on September 26, 2012, giving Defendants three weeks to schedule their travel plans to accommodate a full day of testimony. (Doc. 99-2, Ex. 2.) Instead, Guerrieri scheduled an evening flight for which he had to leave at 5 p.m. before completing the deposition. Plaintiffs note that it was only after a few hours of testimony that counsel first indicated he had to leave early to catch his flight while offering to continue the deposition at a later date, if necessary. (Doc. 105- 2, Ex. 13 at 82.) At 4:52 p.m., Guerrieri stated that he "really need[ed] to go" and he would oppose any continuation [*14] of the deposition because it was conducted in a redundant and harassing manner. (Doc. 99-2, Exs. 6, 6-c.) Plaintiffs contend that at no time did Guerrieri attempt to change his flight plans when it became apparent that Hogan's deposition would require more time.

Nevertheless, Plaintiffs were informed two months prior to the deposition that an early start would be preferred as Guerrieri and Hogan planned to fly back to the East coast in the early evening. Guerrieri mentioned to Bleus that it is "probably better for a morn [sic] start so we don't run into Friday evening and can all get out of town timely." (Doc. 99-3, Ex. 1-g.) Further, both Hogan and Guerrieri arrived in Dallas the previous night and were available to start the deposition at an earlier time rather than the later start time of 10 a.m. (Doc. 105 at 5.) Therefore, Defendants assert it was Plaintiffs' deliberate scheduling of a late morning start error that led to the curtailment of the deposition. Although Defendants informed Plaintiffs of their scheduling preferences, there was no firm end time decided upon by the parties.

Plaintiffs maintain that Guerrieri did not suspend Hogan's deposition in order to assert attorney-client [*15] privilege or to move for a protective order from the Court. Under Fed. R. Civ. P. 30(c)(2), a party may suspend a deposition only when necessary: (1) to preserve a privilege; (2) to enforce a limitation ordered by the court; or (3) to present a motion

under Rule 30(d)(3) to terminate or limit the deposition. The only grounds to move to terminate or limit a deposition is if "it is being conducted in a manner evidencing bad faith, or to embarrass, annoy, or oppress the deponent." Fed. R. Civ. P. 30(d)(3); Biovail Labs., Inc. v. Anchen Pharm., Inc., 233 F.R.D. 648 (C.D. Cal. 2006) (internal citation omitted). It is not the embarrassment or annoyance caused by unfavorable answers that is the controlling criterion under 30(d)(3), but "the manner in which the interrogation is conducted that is the basis for refusing to proceed, followed by the required motion to seek relief." In re Stratosphere Corp. Sec. Litig., 182 F.R.D. 614, 619 (D. Nev. 1998). The motion may be filed in the court where the action is pending or the deposition is being taken and if the party so demands, the deposition must be suspended for the time necessary to obtain an order. Fed. R. Civ. P. 30(d)(3)(A). The court may [*16] then order that the deposition be terminated or limit its scope and manner. Id. 30(d)(3)(B). If terminated, the deposition may be resumed only by order of the court where the action is pending. Id. "[If] such a judicial determination is not sought, this Court will presume that there were not sufficient grounds for the objection and instruction not to answer, or the termination of the deposition, and that the action was undertaken merely to obstruct the discovery process." In re Stratosphere Corp. Sec. Litig., 182 F.R.D. at 618-19.

Defendants argue that they terminated the deposition because Bleus "abused and harassed Hogan for nearly 5 hours" and they did not want that conduct to proceed for another two hours. (Doc. 105 at 7.) However, Guerrieri did not move for a protective order pursuant to Rule 30(d)(3) before terminating the deposition. "This tactic contravenes the requirement that an application to terminate must be made to the court." Biovail Labs., 233 F.R.D. at 653 (internal citations and quotations omitted); see also In re Omeprazole Patent Litig., 227 F.R.D. 227, 230 (S.D.N.Y. 2005) ("It is not the prerogative of counsel, but of the court, to rule on objections . . . [I]f [*17] [counsel] believed that the examination was being conducted in bad faith . . . or that the deponents were being needlessly annoyed, embarrassed, or oppressed, he should have halted the examination and applied immediately to the ex parte judge for a ruling on the questions, or for a protective order, pursuant to Rule 30(d)."); Smith v. Logansport Cmty. Sch. Corp., 139 F.R.D. 637, 643 (N.D. Ind. 1991).

Nevertheless, Defendants argue that because Plaintiffs conducted the deposition in bad faith, they should not be allowed to re-open Hogan's deposition. (Doc. 105 at 5.) Bleus asked several questions on allegedly irrelevant matters regarding Hogan's medical history including: (1) a knee injury that occurred more than thirty years prior to the accident (Doc. 105-2, Ex. 13 at 20-24); (2) a worker's compensation

2013 U.S. Dist. LEXIS 35381, *12

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claim that Hogan filed three years prior to the accident (id. at 17-19); and (3) prescription eyeglasses that did not require restrictions on his driving license (id. at 44-46). When Guerrieri objected as to relevance, Bleus replied that the purpose of the inquiry was to learn about Hogan's physical condition and capacity on the date of the accident. (Id. at 18-19.) Even assuming that [*18] such inquiry treaded into non-discoverable subject matter, "the mere fact that more than one, or even that a series of irrelevant questions is asked does not, by itself, constitute the annoyance or oppression contemplated by (30)(d)(3)." In re Stratosphere Corp. Sec. Litig., 182 F.R.D. at 619. When Guerrieri found such questioning to be objectionable, the proper procedure would have been to allow the examination to proceed, with the testimony being taken subject to the objections. See Fed. R. Civ. P. 30(c).

Defendants further assert that Hogan's deposition was conducted in a wasteful manner. Bleus had Hogan read lengthy discovery responses and other documents into the record even though the exhibits had been marked and enlarged for display. (Doc. 105-2, Ex. 13 at 62-73.) Further, Bleus "put on quite the show" by directing the videographer to focus on certain displays and the deponent at various moments for dramatic effect. (Doc. 105 at 6.) Such tactics are not productive.

Besides irrelevant inquiries and counter-productive tactics, Defendants contend that Bleus repeatedly asked Hogan the same questions after he had answered them in a complete manner. Repetitive questioning can evince [*19] bad faith or a motive to harass the deponent if it is excessive. See Mezu v. Morgan State Univ., 269 F.R.D. 565, 584 (D. Md. 2010) ("[I]f the deponent answers a question completely, counsel should not repeatedly ask the same or substantially identical question.") (internal citation and quotation omitted); Smith, 139 F.R.D. at 646 (noting that "it would not be appropriate for counsel examining a deponent to repeatedly and deliberately duplicate questions. . . . Such a practice, . . . could support a motion to terminate a deposition under Rule 30(d), if employed to such an extent that bad faith or a motive to harass the deponent could properly be inferred."). There were many redundant exchanges in Hogan's deposition. To establish that Hogan did not formally compose his discovery responses, Bleus repeatedly asked Hogan whether he knew the meaning of the words "subsequently" and "verbatim" even though Hogan answered each time that he did not. (Doc. 105-2, Ex. 13 at 74-84.) Hogan eventually asked Bleus "[c]an you please let me know what it means?" (Id. at 96.) Bleus inquired multiple times where Hogan was living at the time of the accident (id. at 38) and whether he believed he was a safe [*20] and careful driver (id. at 39-40, 42, 245-46). In another exchange, Bleus repeatedly asked Hogan when he had first

seen Plaintiffs' vehicle on the date of the accident after he had answered "when it was in the medium [sic]." (Id. at 87-93.) At various times, Bleus inquired about the same traffic citations in Hogan's driving history to authenticate them and ask if his employers had taken action against him for those citations. This led Guerrieri to object that Bleus's questioning was "on the verge of badgering," they had covered the same ground "over and over again," and it was unnecessary to authenticate the same traffic citations "nine times in a row." (Id. at 245-46.) There was no need for Bleus to ask the same questions after Hogan had fully answered them on the record even if Bleus was testing Hogan's "knowledge, recollection and veracity." See Smith, 139 F.R.D. at 646. Nor was there a need to repeatedly authenticate the same documents. Taken as a whole, these repetitive lines of inquiry were indeed wasteful and an annoyance. They further demonstrate an intent to harass.

Defendants assert that Bleus routinely asked attorney-client privileged questions during the deposition. The [*21] first instance is when Bleus inquired whether Hogan spoke with Guerrieri during a break about his deposition testimony. (Doc. 105-2 at 43-44.) Bleus did not inquire into the substance of that conversation. (Id.) Therefore, his question did not implicate the attorney-client privilege. The second instance is when Bleus questioned Hogan about who helped prepare his discovery responses at which point Guerrieri objected, stating that "[w]e're getting really dangerously close to attorney/client privilege here. I'm going to instruct him not to answer in a minute." (Id. at 79-80.) Bleus again inquired as to who placed certain words in Hogan's responses, eliciting another objection. (Id. at 80-81.) At that point, Bleus called the Court to clarify what he could properly ask from Hogan. (Id. at 80-82.) Upon return, he stated that the Court permitted him to ask about the substance of Hogan's discovery responses but not their formal preparation. (Id. at 84.) Bleus followed the proper procedure and did not retread the same ground during the remainder of the deposition. Thus, after receiving direction from the Court, Bleus's questioning did not repeatedly implicate the attorney-client privilege or [*22] work product immunity in a manner amounting to bad faith.

Defendants contend that Hogan and Guerrieri were subject to additional harassing and abusive conduct during the deposition. Bleus spent significant time questioning Hogan about who had helped Hogan prepare his discovery responses. He asked Hogan whether he knew the definitions of words used in the responses and if he normally refers to himself in the third person as he did in his responses. (Id. at 73-84.) Guerrieri objected to the nature of Bleus's questioning as argumentative. (Id. at 76.) In response, Bleus threatened that any person who assisted Hogan in preparing his discovery responses, including Guerrieri, would be made to testify about

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that preparation. (Id.) Such threats are not only counterproductive but "unprofessional and discourteous." See Freeman v. Schointuck, 192 F.R.D. 187, 189 (D. Md. 2000). However, inquiry into the substance of discovery responses is not barred during a deposition. See Smith, 139 F.R.D. at 646 (noting that an oral deposition "is not merely a device to uncover and develop information. It also provides a legitimate and efficient means of testing a witness' knowledge, recollection and veracity."). [*23] Defendants have established that Bleus was unprofessional and discourteous.

When challenged by Guerrieri to justify another line of inquiry, Bleus further questioned Hogan's veracity stating "[w]ell, thus far we have, in my opinion, found that your client has misrepresented certain facts" and "I have further proof that perhaps your client has been less than truthful about these disclosures." (Doc. 105-2, Ex. 13 at 163, 165.) Although the ensuing exchange was especially testy, Bleus's statements in response to Guerrieri's challenge do not evince harassing conduct. See Brincko v. Rio Properties, Inc., 278 F.R.D. 576, 584 (D. Nev. 2011) (noting that there are many occasions in which deposing counsel may ask a question or make a statement that a deponent or counsel consider improper, "but will be unable to show [that it] is [made] in bad faith, or to annoy, embarrass or harass the witness."). Nonetheless, Bleus's overall conduct during Hogan's deposition was frequently counterproductive and wasteful. See Freeman, 192 F.R.D. at 189 ("No one expects the deposition of a key witness in a hotly contested case to be a non-stop exchange of pleasantries. However, it must not be allowed to become [*24] an excuse for counsel to engage in acts of rhetorical road rage against a deponent and opposing counsel."); Mezu, 269 F.R.D. at 584. It was also discourteous and unprofessional.

Plaintiffs argue that because Guerrieri unilaterally suspended Hogan's deposition without claiming attorney-client privilege or moving for a protective order, Bleus was unable to inquire about several relevant topics in preparation for trial. Plaintiffs want to re-open Hogan's deposition to further impeach Hogan, question Hogan about his employment materials, training materials, and materials dealing with Defendants Mayflower and Clark as they relate to Hogan as well as about other materials relating directly to the accident with Plaintiffs. (Doc. 99 at 5.)

With some important restrictions, the Court will allow Plaintiffs to continue Hogan's deposition for two hours and eighteen minutes (2:18) pursuant to the presumptive limit under Rule 30(d)(1) and the Court's Case Management Order (Doc. 59 at 3). Although that limit is a presumptive and not mandatory one, Plaintiffs have described remaining areas of inquiry that are relevant to this personal injury accident case.

It is within the scope of discovery to question [*25] Hogan regarding his training, relationship with the corporate Defendants, and accident-related documents. Further, knowledge and veracity of the deponent are always at issue during witness testimony. See Smith, 139 F.R.D. at 646.

Plaintiffs seek to continue Hogan's deposition in Albuquerque, New Mexico. The Court "has wide discretion to establish the time and place of depositions." Hyde & Drath v. Baker, 24 F.3d 1162, 1166 (9th Cir. 1994). Hogan routinely trucks in Canada and resides in Florida. He would spend significant time and expense to travel to New Mexico for a second deposition of a little over two hours. The previous deposition took place in Dallas, Texas because it was amenable to Hogan's trucking schedule. The parties will agree to a mutually convenient location for the second deposition. In the alternative, they may jointly stipulate to take the deposition telephonically or by other remote means. Fed. R. Civ. P. 30(b)(4). Further, the actions of both parties have led to this second deposition. Although the Court deems Bleus the less responsible of the two, because he conducted the deposition in a wasteful unprofessional and discourteous manner, Guerrieri unilaterally suspended [*26] the deposition without offering to continue it at a later date or moving for a protective order. Accordingly, Defendants' travel expenses and attorneys' fees related to Hogan's second deposition will be shared equally by the parties' attorneys. See Interlego A.G. v. Leslie-Henry Co., 32 F.R.D. 9, 11 (M.D. Pa. 1963) ("The allowance of travel expenses and counsel fees incident to depositions is also in the court's discretion."); Quantachrome Corp. v. Micromeritics Instrument Corp., 189 F.R.D. 697, 701 (S.D. Fla. 1999) (holding that because a party caused the need for further depositions, that party should bear the costs of retaking the depositions); In re China Merchants Steam Nav. Co., 259 F. Supp. 75, 78 (S.D.N.Y. 1966). By this the Court means that, if the deposition is reconvened or if such travel is necessary, Guerrieri and Bleus personally will pay in equal proportion the reasonable amount of travel, lodging, local transportation and meals incurred by Hogan in the reconvened deposition. If Hogan needs such money advanced a reasonable amount shall be advanced in equal proportion by both Guerrieri and Bleus personally. Further, Guerrieri, and/or his partners and associates will keep [*27] track of the time and reasonable charges they incur in preparing Hogan for and representing him at this second deposition. The Court will determine what portion of that time, if any, is reasonable, and divide it in half. Guerrieri will be unable to bill his client for his half of what the Court determines to be his reasonable charges. Bleus will personally pay his half of those charges to Defendants. Both counsel are prohibited from billing their respective clients for the above amount that they are liable to pay, or from, in any way, deducting it from any amount they may recover on behalf of their clients. Both counsel are

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further ordered to provide a copy of this order to their clients and fully explain it to them.

IV. SANCTIONS FOR DEFENDANT HOGAN'S DISCOVERY ABUSES

Plaintiffs move for sanctions for alleged discovery abuses during Hogan's deposition. They argue that Hogan provided false testimony and evasive answers which is sufficient evidence of bad faith to warrant the imposition of sanctions. A party's failure to cooperate in discovery or to make disclosures may merit sanctions. See Fed. R. Civ. P. 37. Further, "an evasive or incomplete disclosure, answer, or response must be [*28] treated as a failure to disclose, answer, or respond." Id. 37(a)(4). If a deponent fails to disclose information, the Court may order payment of the reasonable expenses, including attorney's fees, caused by the failure; inform the jury of the party's failure; and may impose other appropriate sanctions. Id. 37(c)(1). The Court may also "impose an appropriate sanction—including the reasonable expenses and attorney's fees incurred by any party—on a person who impedes, delays, or frustrates the fair examination of the deponent," and this sanction may be imposed on a deponent or attorney. Id. 30(d)(2). The Court further has the inherent power to assess sanctions where a party has "acted in bad faith, vexatiously, wantonly, or for oppressive reasons." Chambers v. NASCO, Inc., 501 U.S. 32, 45-46, 111 S. Ct. 2123, 115 L. Ed. 2d 27 (1991).

The record does not reveal that Hogan's answers were evasive or dishonest, or made in bad faith. Plaintiffs point to mistaken answers or omissions that at most exhibit a lacking memory. Hogan did not remember every address at which he resided, either temporarily or long-term, and when asked by Bleus Hogan mentioned only those that he could recall. (Doc. 99-5, Exs. 23-26.) When Bleus confronted [*29] Hogan with other residential addresses, he readily admitted to having lived there. As a professional truck driver, it is expected that Hogan may not recall every traffic infraction for which he was cited more than ten years prior to the subject accident. (Doc. 99-6, Exs. 39-45.) Regarding the subject accident that occurred nearly two years prior to the deposition, Hogan mistook which of the three cars he was apparently hauling that day that he was driving. (Id., Ex. 34.) He could not recall the specific language used in the citation for his involvement in the accident, although he had reviewed the accident report before the deposition. (Id., Exs. 35-38.) Hogan's lack of remembrance and omissions seem to be inadvertent and do not demonstrate that he was less than forthcoming in his deposition.

Additional testimony provided by Hogan may have contradicted other sources but that is not surprising. Hogan

testified he never saw Plaintiffs' vehicle at any time prior to the rollover of that vehicle in the highway median. (Doc. 99-5, Exs. 15-18.) That testimony is consistent with his interview on the date of the accident as documented in the accident report (Doc. 99-4, Ex. 9) and his answer [*30] to interrogatories (id., Ex. 13 at 3). However, it is contrary to the investigating officer's testimony that Hogan told him he had observed the vehicle next to him during a lane change maneuver. (Doc. 100, Ex. 1 at 82-83.) It is unremarkable that the officer's recollection of Hogan's statements and Hogan's own recollection of the accident differ. Plaintiffs also contend that Hogan lied about using a Plaintiff's mobile phone to call 911 at the scene of the accident (Doc. 99-5, Exs. 12, 19, 20) and about the fact that he voluntarily quit from a former trucking position, when he was in fact terminated (Doc. 99-5, Ex. 31; Doc. 99-6, Ex. 32). If Hogan did provide false answers under oath, that may, of course, be used to be impeach his testimony at trial and may support a finding against Defendants on the issues to which the false answers were relevant. However, Hogan's conduct at the deposition does not merit sanctions.

V. RULE 30(B)(6) DEPOSITIONS OF DEFENDANTS MAYFLOWER AND CLARK

Plaintiffs move to compel Defendants Mayflower and Clark to designate corporate representatives for Rule 30(b)(6) depositions. A party may notice a corporation's deposition without specifically naming the individual [*31] to be deposed and instead setting forth "with reasonable particularity" the matters on which the examination is requested, so the corporation can designate one or more individuals to testify. Fed. R. Civ. P. 30(b)(6). "[T]he effectiveness of the Rule bears heavily upon the parties' reciprocal obligations." Prokosch v. Catalina Lighting, Inc., 193 F.R.D. 633, 638 (D. Minn. 2000). The party requesting the deposition must "reasonably particularize the subjects of the intended inquiry so as to facilitate the responding party's selection of the most suitable deponent." Id.; see also Dwelly v. Yamaha Motor Corp., 214 F.R.D. 537, 540 (D. Minn. 2003) ("[T]he Rule only operates effectively when the requesting party specifically designates the topics for deposition, and when the producing party produces such number of persons as will satisfy the request.") (internal quotations and citations omitted). After receiving the notice, the responding party "must make a conscientious good-faith endeavor to designate the persons having knowledge of the matters sought by [the requesting party] and to prepare those persons in order that they can answer fully, completely, unevasively, . . . as to the relevant [*32] subject matters." Prokosch, 193 F.R.D. at 638 (quotations and citations omitted). The deponent's testimony binds the corporation and may be used at trial by an adverse party for any purpose. Sanders v. Circle K Corp., 137 F.R.D.

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292, 294 (D. Ariz. 1991).

Defendants argue that it is simply too late to notice these depositions. They contend that Plaintiffs waited more than eight months before requesting them on November 1, 2012, two months before the discovery deadline, even though Plaintiffs' claims against the corporate Defendants have not changed. Plaintiffs assert that they first requested the 30(b)(6) depositions on June 14, 2012. Plaintiffs' counsel, Josh Eden, had stated in an e-mail exchange with Guerrieri that if Defendants were not prepared to stipulate as to Hogan being in the course and scope of his employment at the time of the accident, "let this message serve as our formal request for Rule 30(b)(6) deponent designation and request." (Doc. 99-7, Ex. 49.) This e-mail did not constitute a formal request for Rule 30(b)(6) depositions as it did not set forth "with reasonable particularity" the matters on which the examination was requested. It simply put Defendants on notice [*33] that a request may be forthcoming. Plaintiffs submitted a formal request to Defendants on November 1, 2012 listing categories that would be covered in the 30(b)(6) depositions. (Doc. 99-7, Ex. 51.) This request was tardy because it would require multiple depositions to be taken during the holiday months before the fact discovery deadline of January 11, 2013. However, as the depositions could lead to relevant discovery and a brief extension of the deadline would suffice, the Court will consider the merits of Plaintiffs' request.

Plaintiffs' formal request states that specific topics to be covered in the 30(b)(6) depositions of Defendants Mayflower and Clark "will include but will not be limited to":

(1) company policy and procedure(s); (2) company hiring practices including employee background check and interview process; (3) driver training, (4) driver infraction reporting; (5) company employee retention process; (6) employer handbooks; (7) employment manuals; (8) employee training; (9) employment termination policy; (10) employee specific employment file (re: Dana Hogan); (11) any file materials related to Dana Hogan, and (12) any and all topics and matters not listed but directly related [*34] to the above.

(Id.) At the outset, Defendants contend that certain categories are either overbroad or require limitation. "[T]he requesting party must take care to designate, with painstaking specificity, the particular subject areas that are intended to be questioned, and that are relevant to the issues in dispute." Prokosch, 193 F.R.D. at 638.

Some of the requested categories cover a large amount of information that may be irrelevant to Plaintiffs' claims. The

categories "company policies and procedures," "company employee retention process," "employer handbooks", "employment manuals" are overbroad as they are not limited to areas relevant to this personal injury matter. Although the categories of "employee specific employment file" and "any file materials" are limited to Defendant Dana Hogan, there may be numerous records contained therein. The inquiry into Hogan's employment file should be further limited to the relevant topics in this case. The burden is on Plaintiffs, as the party requesting the deposition, to satisfy the "reasonable particularity" standard of Rule 30(b)(6). Without further clarification, Defendants cannot reasonably designate and prepare a corporate representative [*35] to testify on their behalf regarding these broad lines of inquiry. See Innomed Labs, LLC v. Alza Corp., 211 F.R.D. 237, 240 (S.D.N.Y. 2002). Sufficient discovery based on numerous interrogatories and requests for production has been produced to allow Plaintiffs to narrow the focus of these categories. The Court will require Plaintiffs to file an amended Rule 30(b)(6) notice that reasonably limits these lines of inquiry. Further, Plaintiffs' notice includes language that the topics "will include but not be limited to" the categories listed in the notice and that "any and all topics and matters not listed but directly related to the above" would be inquired into during the depositions. This language is overbroad and defeats the purpose of having categories at all. See id.; Tri-State Hosp. Supply Corp. v. United States, 226 F.R.D. 118, 125 (D.D.C. 2005); Reed v. Bennett, 193 F.R.D. 689, 692 (D. Kan. 2000). It will be stricken from the amended notice.

Further, the categories of "company hiring practices including employee background check and interview process", "driver training", "company employee retention practices", and "employment termination policy" should be inquired into only as [*36] they apply to independent drivers and not as they apply to other employees. The Court agrees this is a reasonable limitation. Defendants also request Plaintiffs to clarify the category of "driver infraction reporting" as to whether it is the reporting of Mayflower and Clark, or of the drivers, the Motor Vehicle Division, third party background check companies, or another party into which Plaintiffs would inquire. Plaintiffs will clarify that category in their amended notice along with the other revisions hereby ordered.

If Plaintiffs ask questions outside the scope of the matters described in their notice, "the general deposition rules govern, so that relevant questions may be asked and no special protection is conferred on a deponent by virtue of the fact that the deposition was noticed under 30(b)(6)." Detoy v. City and Cnty. of San Francisco, 196 F.R.D. 362, 367 (N.D. Cal. 2000). If the corporate representative "does not know the answer to questions outside the scope of the matters described in the notice, then that is the examining party's problem."

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King v. Pratt & Whitney, a Div. of United Technologies Corp., 161 F.R.D. 475, 476 (S.D. Fla. 1995) aff'd sub nom. King v. Pratt & Whitney, 213 F.3d 646 (11th Cir. 2000). [*37] Defendants' counsel "may note on the record that answers to questions beyond the scope of the Rule 30(b)(6) designation are not intended as the answers of the designating party and do not bind the designating party." Detoy, 196 F.R.D. at 367. However, Defendants are advised that Rule 30(b)(6) implicitly requires persons to review all matters known or reasonably available to the corporation in preparation for the deposition. Bd. of Trustees of Leland Stanford Junior Univ. v. Tyco Int'l Ltd., 253 F.R.D. 524, 525-26 (C.D. Cal. 2008) (internal citations and quotations omitted); see also Calzaturficio S.C.A.R.P.A. v. Fabiano Shoe Co., Inc., 201 F.R.D. 33, 36 (D. Mass. 2001).

Defendants request that each deposition be limited to four hours, as can be scheduled. In light of Plaintiff's demonstrated tendency to needlessly extend depositions by irrelevant, and harassing questions, and in light of his overly broad 30(b)(6) designations, the request is granted. Plaintiffs will have more than adequate time to take such depositions if they appropriately limit the designations, and if they are efficient in their questioning.

Defendants further request that the depositions be conducted telephonically [*38] or by video conference. Fed. R. Civ. P. 30(b)(4) provides, in relevant part, that "[t]he parties may stipulate—or the court may on motion order—that a deposition be taken by telephone or other remote means." There is no information presented by Defendants by which the Court may meaningfully assess whether such means are feasible, practical, or fair. Accordingly, the Court declines to order that the depositions be taken telephonically absent a stipulation to the same by both parties. Plaintiffs have not chosen a place at which to depose Defendants Mayflower and Clark. Although there is a general presumption that the deposition of a corporate party should be taken at its place of business, that presumption is not conclusive. See Cadent Ltd. v. 3M Unitek Corp., 232 F.R.D. 625, 628 (C.D. Cal. 2005). The Court also considers the convenience of the parties, relative hardships and the economy obtained in attending a particular location. See id. at 628-29. Plaintiffs do not argue there is any particular hardship in traveling to take these depositions and have previously offered to do so. (Doc. 105-1, Ex. 10.) Thus, the 30(b)(6) depositions shall be taken at the places of business of Defendants [*39] Mayflower and Clark in Missouri and New York, respectively, on convenient dates to be determined by the parties.

IT IS HEREBY ORDERED that Defendants' Motion for Sanctions for Failure to Confer in Good Faith (Doc. 105) is granted, as follows:

1. Plaintiffs' counsel is ordered to pay Defendants' reasonable attorneys' fees incurred in attending the teleconference with the Court on November 29, 2012 and responding to Plaintiffs' discovery motion (Doc. 99) pursuant to Local Rule 7.2(j) and upon Defendants' application in compliance with Local Rule 54.2.

IT IS FURTHER ORDERED, that Plaintiffs' Motion to Re-Open Defendant Dana A. Hogan's deposition (Doc. 99) is granted, as follows:

1. Plaintiffs will continue Hogan's deposition for no longer than two hours and eighteen minutes (2:18) pursuant to Fed. R. Civ. P 30(d)(1). Areas of inquiry will be restricted to (1) Hogan's employment and training materials, (2) materials dealing with Defendants Mayflower and Clark as they relate to Hogan, and (3) other materials relating directly to the accident with Plaintiffs.

2. If Plaintiffs exceed these areas of inquiry, engage in wasteful or redundant questioning, or persist in inquiring about matter which [*40] implicates attorney-client privilege, Defendants may suspend the deposition to move for a protective order pursuant to Fed. R. Civ. P 30(d)(3). If the motion is granted, the deposition will be terminated and Plaintiffs will be subject to sanctions pursuant to Fed. R. Civ. P. 30(d)(2).

3. The parties shall agree upon a mutually convenient location and date for the deposition. In the alternative, they may jointly stipulate to take the deposition telephonically or by other remote means, pursuant to Fed. R. Civ. P. 30(b)(4).

4. Defendants' travel expenses, reasonable preparation costs, and attorneys' fees related to Hogan's second deposition will be shared equally by the parties' counsel. Upon conclusion of the deposition, Defendants shall apply for such fees and costs in compliance with Local Rule 54.2.

IT IS FURTHER ORDERED, that Plaintiffs' Motion for Sanctions for Defendant Hogan's Discovery Abuses (Doc. 99) is denied.

IT IS FURTHER ORDERED, that Plaintiffs' Motion to Compel Rule 30(b)(6) Depositions of Defendants Mayflower and Clark (Doc. 99) is granted, as follows:

1. Plaintiffs shall, no later than seven days from entry of this order, file an amended notice for Rule 30(b)(6) depositions [*41] of Defendants Mayflower and Clark limiting and clarifying the topics of inquiry as described in this Order.

2. The depositions of Defendants Mayflower and Clark will be taken at their places of business in Missouri and New

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York, respectively. In the alternative, the parties may jointly stipulate to take the deposition telephonically or by other remote means, pursuant to Fed. R. Civ. P. 30(b)(4). The parties shall agree upon mutually convenient dates for the depositions. Each deposition shall be limited to one day of four hours pursuant to Fed. R. Civ. P. 30(d)(1) and subject to a protective order and termination if wasteful, abusive, or harassing conduct occurs.

IT IS FURTHER ORDERED, that the deadline for completing Hogan's second deposition, the Rule 30(b)(6) depositions, and related filings shall be extended to May 13, 2013.

Dated this 14th day of March, 2013.

/s/ G. Murray Snow

G. Murray Snow

United States District Judge

End of Document

2013 U.S. Dist. LEXIS 35381, *41