Sanctions Denied, But Be Careful What You Agree To (Part I)

In Canter v. Zeigler, 2022 WL 6754646 (D. Md. Oct. 10, 2022)(Sullivan, J.), a contempt motion was made because the State failed to timely perform its agreement that had been incorporated into a Court order.  The lawsuit was filed by an inmate against prison medical and supervisory staff.  Plaintiff served a subpoena on a non-party, the State Department of Public Safety and Correctional Services (“DPSCS”).

After a dispute arose over the subpoena, the parties conferred, reached agreement, and filed a stipulation that was subsequently approved by the Court.  DPSCS, however, did not complete its production by the expiration of the agreed-upon time.  Plaintiff’s contempt motion was denied based on the facts presented.

Canter raises an age-old concern – be careful what you agree to.

For example, in In Re Fannie Mae, 552 F.3d 814 (Fed. Cir. 2009), OFHEO’s attorneys agreed to a discovery deadline.  Their client undertook extensive efforts to comply, but failed.  The client spent more than $6 million, which was 9% of its annual budget, and was still held in contempt.  The Federal Circuit wrote: “OFHEO has treated its Court-ordered deadlines as movable goal posts and has repeatedly miscalculated the efforts required for compliance and sought thereafter to move them.”

That’s not exactly what DPSCS did here, but it is similar.

On the other hand, in I-Med Pharma, Inc. v. Biomatrix, Inc., 2011 WL 6140658 (D.N.J Dec. 9, 2011)(unpublished), plaintiff stipulated to use of 59 broad search terms.

 

The search was not limited to targeted document custodians or relevant time periods. Indeed, the search was not even limited to active files. The expert was instructed to run the search terms across all data on the computer system, including so-called “unallocated space”—

When the searches were run, the parties found out that they retrieved an estimated millions of pages of data from unallocated space.  Plaintiff then asked to move the goal posts.  The court held that discovery orders are interlocutory and afforded some relief in the interests of justice. “[1]

That’s not exactly what the Canter Court did, but it is similar.

In Canter, the plaintiff responded to DSCPS’s delay with a broadside, filing a request to show cause why DPSCS should not be held in contempt. The Court held a discovery conference and in a follow-up status report, DPSCS expressed an “overarching goal” to produce documents “as quickly as possible.”

In other words, DPSCS argued that the goalposts should be movable.

The Court moved them, with a stern warning.  After the Court directed another status report and held another discovery conference, an order was entered to produce outstanding and overdue responses by May 20, 2022.  The order stated:

Plaintiff raised concerns that the State has previously failed to honor its agreements to produce discovery by set deadlines, even when the Court has ordered to the State to do so. Because Plaintiff’s concerns are warranted, the Court warns the State that failure to comply with this Order compelling the production of discovery by May 20, 2022, will result in serious sanctions. Specifically, if the State fails to comply with this Order, the Court intends to recommend that Judge Hazel enter default judgment as to liability against the State[2] Defendants, pursuant to Rule 37 and the inherent authority of the Court.

The Court also ordered a subsequent joint status report.  In separate reports, plaintiff asserted insufficient responses and defendant reported overwhelming compliance.

The Court then held another conference.  The plaintiff asserted failures and DPSCS “insisted that it was doing its best.”  The Court ordered that the parties meet and confer, because “these alleged deficiencies were too numerous to address during the telephone conference.”

In a follow-up status report, plaintiff alleged critical discovery failures.  DPSCS responded that plaintiff admitted to not having reviewed all of the documents and reiterated that it continued to work vigorously.  Plaintiff sought leave to move for sanctions, alleging that DPSCS had “not invested in the resources necessary to comply” with its discovery obligations.

The Fannie Mae case would suggest a sanction and perhaps contempt.  I-Med Pharma appears to lead to the opposite result.

The Canter Court found that DPSCS had violated two Court orders.  It wrote:

By the State’s own admission, it did not complete its discovery production by these deadlines. And notably, the State never moved to modify the production deadline of either order. Instead, the State presented after-the-fact justifications for why it failed to complete its discovery production as ordered by the Court.

However, the Court found that sanctions were not warranted against DPSCS.  It wrote:

DPSCS determined that it needed to convert the 40 custodians’ emails from encrypted, non-searchable documents to unencrypted searchable documents. It began doing so in mid-December.  This process continued for four months, with the downloads running nonstop, 24 hours a day, 7 days a week.  In some instances, corrupted data required a new production and download. The process took so long “due to the sheer amount of data that was requested.” ….  DPSCS contracted with VENDOR’S NAME OMITTED,[3] an e-discovery platform, to process the large amount of data.  The VENDOR’S NAME OMITTED contract was approved in mid-February 2022.  The process of uploading the data to VENDOR’S NAME OMITTED’s system began on February 15, 2022 and continued through July 7, 2022. Once that was completed, the search terms were run against the data, and the documents retrieved were reviewed, then Bates stamped, and marked with confidentiality designations where appropriate.  DPSCS describes VENDOR’S NAME OMITTED’s processing as “slow and cumbersome at best,” and notes that VENDOR’S NAME OMITTED “had an issue producing .zip files that could be reviewed by Plaintiff’s counsel” until “a work-around was devised.”  Ultimately, VENDOR’S NAME OMITTED sorted through 2.5 million documents and emails “that averaged 10-20 pages apiece.” [citations omitted].

DPSCS proffered that it had coordinated with over a dozen people.  The Court wrote that: “A review of [DPSCS’s] information indicates that most categories of information had been produced to Plaintiff before May 20, 2022.”

While the decision involved potentially significant Constitutional claims, there is no indication that defendants or DCSPS raised any proportionality issue.

The Court held that contempt sanctions were not warranted because of substantial compliance with the orders, even though compliance was late.  Further, contempt would not be coercive, because DPSCS had substantially complied.  In denying the plaintiff’s fee claim, the Court wrote:

Although DPSCS’s response to the subpoena was untimely, and although DPSCS directly violated two Court orders, it appears that DPSCS (1) had a good faith inability to comply with the production deadlines of the Court’s orders, and (2) produced its response to the subpoena as soon as it could do so. [emphasis added].

The Court held that Rule 37(b) sanctions were unavailable because they are limited to parties and their officers, directors, managing agent, and corporate designees.  It held that it could not sanction the defendants for the violations by non-party DPSCS for failing to timely respond to a subpoena.

The Court then preceded to address sanctions issues regarding individual, named defendants.  I am not discussing them here.

As a former Deputy Chief of Civil Litigation in the Maryland Attorney General’s Office, I understand the State’s resource issues.  However, the failure to request an extension of time is, as the Court wrote, puzzling – – at a minimum.  Further, it may be questioned whether proportionality – even for important Constitutional claims such as these – supports requests for discovery from 40 custodians and 2.5 million documents averaging 10-20 pages each, in a process that continued for four months, with the downloads running nonstop, 24 hours a day, 7 days a wee  And, even though the damages claim was likely substantial,[4] and while apparently the defense did not raise proportionality, there was also no mention of any suggestion by either party for phased discovery to reduce the burden.

I suggest that the Fannie Mae approach is punitive and unduly restrictive.  That said, it is best to be careful about what you agree to in a Rule 26(f) conference of the parties.  In the words of the I-Med Pharma court:

While Plaintiff should have known better than to agree to the search terms used here, the interests of justice and basic fairness are little served by forcing Plaintiff to undertake an enormously expensive privilege review of material that is unlikely to contain non-duplicative evidence.

The Canter Court’s decision appears rock solid, especially based on the parties’ arguments.

UPDATE:  November 11, 2022 – Be Careful What You Agree To, But the Duty to Cooperate May Provide an Escape Hatch (Part II)

_____

[1] The court wrote: “The September 9 order modified the terms of a prior January 14, 2011 order that required Plaintiff to produce the results of a forensic examination of its computer system. Under the terms of the new order, Plaintiff would not be required to produce documents recovered from any unallocated space files found on its system.”  It added: “While courts should not casually discard agreements between the parties, nor should they abrogate their duty to balance both burden and the likelihood of uncovering relevant evidence merely because a party made an improvident agreement.”

[2] The “State” defendants included DPSCS and the named defendants.

[3] I am omitting the vendor’s name because there was no opportunity for a response by the vendor.

[4] Plaintiff was diagnosed with gender dysphoria and alleged that she was denied hormone treatments that had begun prior to incarceration.  She alleged that this led to 18 suicide attempts.  Canter v. Mamboob, 2020 WL 1331894, at *1 (D. Md. Mar. 23, 2020).