Docket Entries Since Last Update
NOTE: This court's RSS feed does not list MOTION entries, so Bloomberg Law cannot detect them and thus they will not be listed here. However, motions will be included if you update the docket.
WEBER MANUFACTURING TECHNOLOGIES, INC., Plaintiff, v. PLASAN CARBON COMPOSITES, INC., Defendant.
July 26, 2016, Filed
July 26, 2016, Decided
For Weber Manufacturing Technologies Inc., Plaintiff, Counter Defendant: Doron Yitzchaki, Dickinson Wright, Ann Arbor, MI; Daniel D. Quick, Dickinson Wright, Troy, MI.
For Plasan Carbon Composites, Inc. Defendant, Counter Claimant: Alex G. Cavanaugh, Thomas H. Walters, Howard & Howard Attorneys PLLC, Royal Oak, MI; Stephen P. Dunn, Howard & Howard, Royal Oak, MI.
Stephanie Dawkins Davis, United States Magistrate Judge. Gerald E. Rosen, United States District Judge.
Stephanie Dawkins Davis
REPORT AND RECOMMENDATION PLAINTIFF'S MOTION FOR SANCTIONS (Dkt. 59)
A. Procedural History
On May 13, 2016, plaintiff, Weber Manufacturing Technologies, Inc., filed a motion for sanctions. (Dkt. 59, 60). This matter was referred to the undersigned on May 26, 2016 for report and recommendation. (Dkt. 61). Defendant, Plason Carbon Composites, Inc., filed a response on May 27, 2016 and Weber filed a reply on June 6, 2016. (Dkt. 64, 98). On June 10, 2016, the parties filed their joint statement of resolved and unresolved issues. (Dkt. 101). Pursuant to notice, the Court held an in-person hearing on June 21, 2016. (Dkt. 96). This matter is now ready for report and recommendation.
B. Factual Background and Parties' Positions
This matter involves a dispute between the parties regarding various automotive mold tools that Plasan maintains failed because of Weber's incompetence in manufacturing them, while Weber maintains that Plasan subjected the tools to conditions that it argues caused the tools to fail. According to Weber, it specified from the beginning that the copper pipes in its tools could not withstand temperatures above 410°. After Plasan ordered the production tools in 2011, it began noticing delamination (the effect of the solder around the copper pipes cracking and pulling away from the surface of the tool) which affected the heat transfer aspects of the tool and increased the cycle time to create parts. In early 2013, Weber started placing temperature stickers on the tools because it believed that Plasan was overheating them. According to Weber, the stickers revealed high temperatures. In addition, Plasan placed its own stickers, which Weber says had the same results. Weber also asserts that Plasan began discussing a claim against Weber by October 2013.
Weber asserts that Plasan produced no temperature tags, readings, or photos of the tags after September 2013. During a January 2015 inspection by Weber's expert, several tools were observed to have temperature stickers affixed to them, but again no readings after September 2013 were produced. During an April 2016 inspection conducted as part of supplemental discovery, Weber learned that Plasan had removed all temperature tags from the tools. Weber states that Plasan's Rule 30(b)(6) witness did not know anything about the temperature tag protocols or what happened to the stickers. Weber also maintains [*2] that Plasan had an obligation to preserve the temperature related evidence as of late 2013 and given the importance of the evidence, the failure to preserve could only be intentional. Weber moves for sanctions based on the alleged spoliation, the alleged failure to properly prepare Plasan's Rule 30(b)(6) witness, and Plasan's failure to provide a complete supplemental document production.
According to Plasan, Weber levies false allegations of "spoliation" of evidence. Plasan explains that Weber and its proposed rebuttal expert witness inspected, examined and photographed, at their own discretion and choice of approach, the temperature tags on January 28, 2015. (Dkt. 64, Ex. D). Moreover, Plasan claims that it has produced voluminous temperature-related data to Weber. (Dkt. 64, Ex. E). Plasan maintains that it is undisputed that Plasan produced, and Weber inspected and photographically preserved for trial, the "temperature tag stickers" that it now falsely contends were somehow "spoliated." According to Plasan, they were merely discarded (a) after Weber and its proposed expert inspected them and preserved for trial what it deemed important, (b) after Weber and its proposed expert then admitted that the temperature tags are unreliable anyway, and (c) after discovery had closed. (Dkt. 64, Ex. C, p. 56). Thus, Plasan argues that no "spoliation" sanction is appropriate concerning the temperature data or temperature tag stickers.
Plasan also points out that Weber never requested production of the temperature tag stickers themselves during discovery and Weber does not even now contend that the physical stickers themselves are required as evidence. According to Plasan, there is no further testing or analysis that Weber contends it seeks to conduct and, in any event, whatever inspection or preservation Weber wanted done it already accomplished, back in January of 2015. Plasan maintains that Weber and its proposed rebuttal expert then testified that the temperature tag stickers were unreliable. (Dkt 64, Ex. F, Weber 30(b)(6) pp. 225:3-227:2; 228:8-13 and Swanger pp. 147:18-148:21).
According to Plasan, Weber conducted no written discovery related to the temperature tags. Rather, Weber requested an inspection and conducted that inspection to its satisfaction in January 2015. Discovery then closed on March 31, 2015. For almost a year after the close of discovery Weber never claimed that Plasan failed to produce anything that Weber requested, never pursued any motion to compel, and in fact, never mentioned the temperature tag stickers until March 2016. Plasan insists that it did not prevent any discovery related to the temperature tags and Weber, in fact, has photographs of the temperature tags from the discovery it did elect to take. Plasan also maintains that Weber experienced no prejudice as a result of the temperature tags being discarded, and asserts further that its document production was adequate and that its Rule 30(b)(6) deponent was properly prepared.
C. Timeliness of Motion for Sanctions Based on Spoliation
The timing of plaintiff' [*3] s motion for sanctions based on spoliation undermines its claim for relief. As explained in Goodman v. Praxair Services, Inc., 632 F.Supp.2d 494 , 506 (D. Md. 2009), Federal Rule of Civil Procedure 37 governs most motions for discovery sanctions, but it does not contain any specific reference to the timing of the filing of a motion seeking spoliation sanctions. See id . (citing McEachron v. Glans, 1999 U.S. Dist. LEXIS 23710 , 1999 WL 33601543 , at *2 (N.D.N.Y. 1999)). Courts considering this issue have identified a number of factors that can be used to assess the timeliness of spoliation motions. Goodman, supra ; see also, Am. Nat. Prop. & Cas. Co. v. Campbell Ins., Inc., [2011 BL 191727], 2011 U.S. Dist. LEXIS 80534 , [2011 BL 191727], 2011 WL 3021399 (M.D. Tenn. 2011), order set aside on other grounds, 2011 WL 6259473 (M.D. Tenn. 2011). First, "[k]ey to the discretionary timeliness assessment of lower courts is how long after the close of discovery the relevant spoliation motion has been made...." Goodman, 632 F.Supp.2d at 506 (citing McEachron v. Glans, 1999 U.S. Dist. LEXIS 23710 , [ WL] at *2 and n. 3 (holding spoliation motion made two weeks after the close of discovery was timely); Shamis v. Ambassador Factors Corp., 34 F.Supp.2d 879 , 886 (S.D.N.Y. 1999) (finding motion for spoliation sanctions filed two months after conclusion of discovery was timely, as it was "not brought well after the close of discovery ... nor after the start of trial.")).
Second, a court should examine the temporal proximity between a spoliation motion and motions for summary judgment. Goodman, 632 F.Supp.2d at 507 (citing Glenn v. Scott Paper Co., 1993 U.S. Dist. LEXIS 14966 , 1993 WL 431161 , at *17 n. 3 (D. N.J. 1993) (spoliation argument used to defend a summary judgment motion was untimely, as the plaintiff did not raise any concerns "during the discovery phase or bring them to the attention of the magistrate [judge]")). Third, courts should be wary of any spoliation motion made on the eve of trial. Goodman, 632 F.Supp.2d at 507 (citing Permasteelisa CS Corp. v. Airolite Co., LLC, [2008 BL 131095], 2008 U.S. Dist. LEXIS 109329 , [2008 BL 131095], 2008 WL 2491747 , at *2-3 Ohio 2008) (spoliation motion filed one week before trial was held to be untimely); Shamis, 34 F.Supp.2d at 886 . Fourth, courts should consider whether there was any governing deadline for filing spoliation motions in the scheduling order issued pursuant to Fed.R.Civ.P. 16(b) or by local rule. Goodman, 632 F.Supp.2d at 507-508 . Finally, the explanation of the moving party as to why the motion was not filed earlier should be considered. Id. at 508 .
In the view of the undersigned, Weber's motion is untimely. Discovery in this matter closed on March 31, 2015, except for the very narrow areas of discovery and supplementation recently permitted by Judge Rosen. (Dkt. 21). Thus, the present motion was filed over one year after the close of discovery. Additionally, this motion was made on the eve of trial, which is scheduled for August 2016. Third, as Plasan points out, Judge Rosen's scheduling order provides that disputed discovery issues should be brought to the Court's attention within 14 days of receipt or notice of such disputed discovery. (Dkt. 15, Pg ID 168). While Judge Rosen's scheduling order does not specifically address motions for sanctions or spoliation, it is clear that he requires parties to timely pursue their discovery-related disputes.
Most importantly, however, Weber's claim that it was unaware of the existence of any additional temperature tags or related data until the supplemental production is questionable. According to Weber, it did not learn that any information was destroyed until [*4] the supplemental discovery was provided in March or April 2016. (Dkt. 138, Pg ID 4499). The basis of this claim is a document dated September 20, 2013, showing that temperature tags were in place on the equipment on that date. (Dkt. 60-5).1 Before this production, Weber claims that it was not aware of the existence of any temperature tag data after September 2013 and that its understanding was that Plasan had stopped using temperature tags at that time because it had decided to sue Weber. (Dkt. 138, Pg ID 4499). Weber's counsel stated at the hearing that until it received this document, it was not aware that Plasan continued to use temperature tags from 2013 through March 2015. Id. However, Weber must have known that Plasan used temperature tags at some point after September 2013, because it admittedly inspected the tools and took pictures of the temperature tags in January 2015. (Dkt. 138, Pg ID 4499-500). Thus, Weber knew or should have known in January 2015, at a minimum, that it did not have all the temperature tags in existence or all the temperature tag data from September 2013 through that date, except for the photos that it took during the inspection. If Weber believed that temperature tags were not used after September 2013, when it inspected the tools in January 2015 and discovered temperature tags were in use, it was obligated to pursue discovery of the tags and related data at that point. Notably, discovery closed a few months later. Thus, Weber was most certainly aware, well before the close of discovery, that temperature tags and related data existed but had not been produced during discovery. Yet, it failed to do anything to follow up on this information for over one year.
The Goodman court provided a thoughtful and well-reasoned analysis to support its conclusion - and similar conclusions reached by many other courts - that spoliation motions must be brought in a timely fashion and most preferably while discovery remains open:
The lesson to be learned from the cases that have sought to define when a spoliation motion should be filed in order to be timely is that there is a particular need for these motions to be filed as soon as reasonably possible after discovery of the facts that underlie the motion.
This is because resolution of spoliation motions are fact intensive, requiring the court to assess when the duty to preserve commenced, whether the party accused of spoliation properly complied with its preservation duty, the degree of culpability involved, the relevance of the lost evidence to the case, and the concomitant prejudice to the party that was deprived of access to the evidence because it was not preserved. Before ruling on a spoliation motion, a court may have to hold a hearing, and if spoliation is found, consideration of an appropriate remedy can involve determinations that may end the litigation or severely alter its course by striking pleadings, precluding proof of facts, foreclosing claims or defenses, or even granting a default judgment. And, in deciding a spoliation motion, the court may order that [*5] additional discovery take place either to develop facts needed to rule on the motion or to afford the party deprived of relevant evidence an additional opportunity to develop it from other sources.
The least disruptive time to undertake this is during the discovery phase, not after it has closed. Reopening discovery, even if for a limited purpose, months after it has closed or after dispositive motions have been filed, or worse still, on the eve of trial, can completely disrupt the pretrial schedule, involve significant cost, and burden the court and parties. Courts are justifiably unsympathetic to litigants who, because of inattention, neglect, or purposeful delay aimed at achieving an unwarranted tactical advantage, attempt to reargue a substantive issue already ruled on by the court through the guise of a spoliation motion, or use such a motion to try to reopen or prolong discovery beyond the time allotted in the pretrial order.Id. at 508 (citation omitted, paragraph breaks added, emphasis added). In the Court's view, waiting until May 13, 2016 - less than two months before trial and over a year after discovery closed - to claim that this evidence was spoliated because the temperature tags were thrown away is simply too late. Thus, the undersigned RECOMMENDS that plaintiff's motion for sanctions based on spoliation be DENIED as untimely.2
D. Motion for Sanctions Based on Rule 30(b)(6) Deposition
Weber says that Plasan failed to properly prepare its Rule 30(b)(6) witness on several topics. The first are Topic Nos. 1 and 2, relating to the performance of the Weber tools, reasons for their repair, and cycle times. According to Weber, the witness, Mr. Staargaard, was not able to provide any proof or testimony regarding the claim that the Weber tools lasted longer once repaired by a third party, Accurate. While he testified that proof was available, Weber says no such evidence was provided in the document production or the deposition. Staargaard could not testify regarding how long a Weber tool would last before requiring repair or how many cycles the new solder had seen, or whether any documentation existed. He had no information about the solder used, its strength, or what was wrong with the solder used by Weber.
Weber also says that Staargaard could not testify regarding Topic No. 3, the KTX tools. For example, Staargaard testified that he did not know what data had been shared or given to KTX to design the tool, including ramp rate and temperature data, he did not know what approvals existed within Plasan or its parent company, he could not identify actual purchase orders or say whether they were executed, and he had no idea the number of cycles run on the KTX tools or the ramp rates used. Further, Weber says that Staargaard was unable to testify competently regarding Topic Nos. 4 and 5, relating to the conditions under which the tools were operated and the evidence of temperatures to which the tools were exposed.
In response, Plasan points out that Weber's counsel asked Mr. Staargaard a combined total of 1,985 questions. Mr. Staargaard [*6] answered every one of the 1,985 questions that he was asked, even though most of the questions were not specifically identified in Weber's 30(b)(6) notice. Plasan maintains Weber falsely suggests that Plasan's designee was a "woefully unprepared 30(b)(6) witness" by selectively referencing a small handful of questions, that are outside the scope of Weber's 30(b)(6) notice, out of nearly 2,000 total questions posed by Weber's counsel. According to Plasan, Weber's motion does not quote a single question and answer, but rather, inaccurately paraphrases subject matters not even identified in the 30(b)(6) notice. Plasan maintains that the actual questions and answers from the pages referenced in Weber's motion are outside the scope of the topics stated in Weber's 30(b)(6) notice. (Compare Dkt. 59, Ex. A and Ex. C). Plasan asserts that Mr. Staargaard was in fact produced and did in fact testify concerning each of the topics listed in Weber's 30(b)(6) notice, despite the fact that Weber's 30(b)(6) notice was vague, overly broad, and did not identify the small handful of questions about which Weber now complains.
Rule 30(b)(6) governs the procedure for taking a corporation's deposition. Under Rule 30(b)(6) , a party may depose a corporation or organization by issuing a notice or subpoena that "describe[s] with reasonable particularity the matters for examination." Fed.R.Civ.P. 30(b)(6) . "Obviously it is not literally possible to take the deposition of a corporation; instead, when a corporation is involved, the information sought must be obtained from natural persons who can speak for the corporation." 8A Charles Alan Wright, Arthur R. Miller, & Richard L. Marcus, Federal Practice & Procedure, § 2103, at 451 (3d ed. 2010). Rule 30(b)(6) requires a corporation to designate a person who can testify about information known or reasonably available to the corporation. Although the designated person does not need personal knowledge of the facts to which he testifies, he must be prepared by the corporation so that he can adequately testify as to the corporation's position. See FDIC v. Butcher, 116 F.R.D. 196 , 199 (E.D. Tenn. 1986) (stating that a corporation must make a good-faith effort to designate persons having knowledge of the matter sought and to prepare those persons), aff'd by 116 F.R.D. 203 (E.D. Tenn. 1987); see also Marker v. Union Fidelity Life Ins. Co., 125 F.R.D. 121 , 126 (M.D. N.C. 1989) (recognizing that Rule 30(b)(6) requires a corporation not only to produce persons to testify with respect to the designated matters, but also to prepare them so that they may give complete, knowledgeable, and binding answers on behalf of the corporation). While Rule 30(b)(6) does not require "absolute perfection in preparation," the corporation "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, and unevasively, the questions posed . . . as to the relevant subject matters." Wilson v. Lakner, 228 F.R.D. 524 , 528 (D. Md. 2005). To put forth a good faith effort, the party must attempt to "collect information, review documents, and interview employees with personal knowledge." [*7] Id . Certainly, Rule 30(b)(6) requires a corporation to prepare its designees "beyond matters personally known to the designee or to matters in which the designee was personally involved." Poole v. Textron, Inc., 192 F.R.D. 494 , 504 (D. Md. 2000).
In the view of the undersigned, Plasan's preparation of Mr. Staargaard met the standard stated above. While Mr. Staargaard could not answer some specific questions, overall, he was prepared, knowledgeable and was able to answer the questions posed. Thus, the undersigned RECOMMENDS that plaintiff's motion for sanctions on this ground be DENIED.3
E. Motion for Sanctions Based on Supplemental Production
In the view of the undersigned, sanctions are not warranted at this time. In the Order Granting Motion to Compel in Part dated July 11, 2016, the undersigned ordered Plasan to produce a declaration "detailing what attempts were made to locate responsive supplemental documents and indicating whether it believes that a sufficiently diligent search was made based on the tools and resources available for the same, and whether its discovery responses were supplemented to the best of its ability to do so." (Dkt. 139, Pg ID 4508). If, based on the declaration, it turns out that additional documents should have been produced and were not, the district court may want to revisit the request for sanctions. Otherwise, the undersigned RECOMMENDS that the motion for sanctions be DENIED.
The parties to this action may object to and seek review of this Report and Recommendation, but are required to file any objections within 14 days of service, as provided for in Federal Rule of Civil Procedure 72(b)(2) and E.D. Mich. Local Rule 72.1(d) . Failure to file specific objections constitutes a waiver of any further right of appeal. Thomas v. Arn, 474 U.S. 140 , 106 S. Ct. 466 , 88 L. Ed. 2d 435 (1985); Howard v. Secretary of HHS, 932 F.2d 505 (6th Cir. 1981). Filing objections that raise some issues but fail to raise others with specificity will not preserve all the objections a party might have to this Report and Recommendation. Willis v. Sullivan, 931 F.2d 390 , 401 (6th Cir. 1991); Smith v. Detroit Fed'n of Teachers Local 231, 829 F.2d 1370 , 1373 (6th Cir. 1987).
Any objections must be labeled as "Objection No. 1," "Objection No. 2," etc. Any objection must recite precisely the provision of this Report and Recommendation to which it pertains. Not later than 14 days after service of an objection, the opposing party may file a concise response proportionate to the objections in length and complexity. Fed.R.Civ.P. 72(b)(2) ; E.D. Mich. Local Rule 72.1(d) . The response must specifically address each issue raised in the objections, in the same order, and labeled as "Response to Objection No. 1," "Response to Objection No. 2," etc. If the Court determines that any objections are without merit, it may rule without awaiting the response.
Date: July 26, 2016
/s/ Stephanie Dawkins Davis
Stephanie Dawkins Davis
United States Magistrate Judge
Weber says this document was not produced until the supplemental production. Plasan maintains that it was previously produced. In any event, the document shows that temperature tags were in use in September 2013 and it is clear that Weber was aware that temperature tags were in use as late as January 2015.
Given this conclusion, the undersigned finds it unnecessary to address the parties' arguments regarding whether Plasan was obliged to preserve the temperature tags after the close of discovery or the other arguments raised regarding whether spoliation occurred or whether an adverse inference is appropriate under Ross v. Am. Red Cross, 567 Fed.Appx. 296 , 302 (6th Cir. 2014).
Notably, the undersigned recently ordered Plasan to produce a declaration "detailing what attempts were made to locate responsive supplemental documents and indicating whether it believes that a sufficiently diligent search was made based on the tools and resources available for the same, and whether its discovery responses were supplemented to the best of its ability to do so." (Dkt. 139, Pg ID 4508). If, based on the declaration, it turns out that additional documents should have been produced and were not, it may be appropriate for the district court to permit Weber the opportunity to conduct a short, second deposition of Mr. Staargaard immediately after the production.