Magistrate Recommends Combination of Remedial Measures for “Excruciatingly Slow and Disjointed Disclosure of Documents”

Lava Trading, Inc. v. Hartford Fire Ins. Co., 2005 WL 459267 (S.D.N.Y. Feb. 24, 2005)

At the conclusion of discovery, defendant moved for the imposition of sanctions on plaintiff, contending that plaintiff had systematically ignored its discovery obligations under the Federal Rules of Civil Procedure, violated a series of court orders directing it to produce documents within specified deadlines, and irremediably prejudiced defendant’s ability to prepare its case. Defendant sought dismissal of the complaint, or, in the alternative, an order (1) precluding plaintiff from presenting evidence on a series of specific topics, (2) authorizing defendant to place in evidence a quantity of emails produced in an untimely fashion by plaintiff and (3) requiring plaintiff to reimburse defendant for the costs of one deposition session and its current motion.

The magistrate found that plaintiff had engaged in repeated improper discovery conduct and that its withholding of a large quantity of relevant and damaging emails until the very end of fact discovery, and well past the conclusion of expert discovery, was inexcusable and had harmed defendant. The magistrate concluded that a combination of measures – including required submission of certain witnesses to further deposition, partial preclusion and cost-shifting – would adequately remedy the prejudice and still permit plaintiff to pursue its claims (if they survived a pending dispositive motion). The magistrate directed that certain corrective measures be promptly undertaken, and further recommend that defendant’s request for dismissal be denied, but that plaintiff be precluded from offering into evidence at trial certain recently produced documents.

Evaluating the plaintiff’s discovery failings, the magistrate found that plaintiff had “engaged in an excruciatingly slow and disjointed disclosure of documents, stretching over a period of one year, under the guise of a ‘rolling’ production or a production in ‘waves.'” 2005 WL 459267 at *9. The magistrate noted that plaintiff had never offered a “coherent justification for this approach to production,” and stated that he saw “no legitimate excuse for it.” Id. He further observed:

Although the documents in question were certainly voluminous, the relevant categories were not difficult to define –indeed they are, for the most part, adequately described in defendant’s first document request — and competent counsel certainly should have had no great difficulty in specifying to their client most of what needed to be produced from the very outset of discovery. Moreover, although more than the normal thirty days might well have been required for full compliance with the first request, plaintiff surely did not require one year, nor were many months needed to comply with the far narrower second and third requests. Indeed, since plaintiff had presumably reviewed many of these documents either in 2002 in preparing its final insurance claim or later, in 2003, when planning its lawsuit for filing, far greater efficiency should plainly have been possible.

In any event, plaintiff had an obligation to seek appropriate extensions, if needed, which it failed to do. It also should have been able to produce substantially all its documents early in the discovery period rather than in fragments throughout – and then long after – fact and expert discovery had concluded. It also had an obligation to ensure that document searches, when initially made, were careful and thorough, still another obligation that it failed to satisfy.

Id. (footnote omitted). In assessing the degree of blame for the current situation, the magistrate noted “a discernible pattern” in plaintiff’s document production:

This includes large-scale productions shortly before several scheduled court conferences; large-scale production on the eve of key depositions; professions by counsel of their belief (typically vague) that all documents in a given category had been produced, followed by very belated production of substantially more documents in the same category; and, most pertinent, an evident failure by counsel to vet their client adequately to determine whether documents either arguably or clearly called for by a document request had been properly searched for and found. We also note repeated representations by counsel that documents were being produced in the manner in which they were retained by the business, a representation that is belied by the testimony of Mr. Korhammer that he was told to review his e-mails in late 2003 or early 2004 and pull out those that seemed to involve the company’s recovery post-September 11.

Id. at *10 (footnotes omitted). The magistrate concluded that, although there was not a sufficient basis to conclude that plaintiff’s behavior was deliberately designed to obstruct discovery and trial preparation, there was sufficient evidence to conclude that plaintiff’s conduct reflected “at least considerable indifference to its discovery obligations.” The magistrate noted that the discovery demands were clear enough, that plaintiff had more than ample time to produce in an orderly and timely fashion what was requested, and that plaintiff failed to come even close to what was required for nearly a year. “Such a performance reflects, at best, gross negligence.” Id.