Insufficient Diligence in Planning and Executing Search for Responsive Documents Warrants Monetary Sanctions, but not Default Judgment

Cardenas v. Dorel Juvenile Group, Inc., 2006 WL 1537394 (D. Kan. June 1, 2006)

In this product liability action involving a Touriva child safety seat, plaintiffs sought sanctions against the defendant pursuant to Rule 37 for various claimed discovery abuses. Among other things, plaintiffs argued that DJG had attempted to conceal a crucial and damaging document known as “CEA 416.” (Plaintiffs explained that “CEA” was an acronym for a “Capital Expenditure Authorization” and was a DJG form which provided a description and justification for a design modification made during the life of a product.) Plaintiffs asked the court to strike DJG’s Answer and preclude DJG from pursuing any of its affirmative defenses in this matter, which would effectively result in the entry of default judgment against DJG.

In response, DJG argued that its failure to timely locate and produce CEA 416 was not intentional or due to bad faith:

DJG explains that it did not initially produce CEA 416 in response to Plaintiffs’ First Request No. 13 because DJG’s outside counsel and in-house personnel responsible for locating responsive documents were unaware of its existence until DJG received Plaintiffs’ Fourth Request for Production. DJG contends that it produced CEA 416 as soon as it was located. DJG maintains that during its investigation into why CEA 416 had not been previously produced, DJG located and promptly produced twenty additional CEAs.

DJG explains that a paralegal employed by DJG coordinated the investigation internally at DJG, including the search for CEAs responsive to Plaintiffs’ First Request No. 13. She did not request that DJG’s accounting department search for all CEAs pertaining to the Touriva, as she was unaware that DJG’s accounting department maintained files of all CEAs. She was able to locate two CEAs relating to the Touriva, which apparently were located in other files, and those were provided to Plaintiffs in DJG’s document production. She apparently believed that those were the only two CEAs in existence that were responsive to Request No. 13. This paralegal left DJG’s employ in September 2005.

DJG further explains that on October 31, 2005, another paralegal began working for DJG and took over the duties of locating documents to be produced in this case. Prompted by Plaintiffs’ Fourth Requests for Production, this new paralegal investigated why CEA 416 had not been previously produced and whether any additional CEAs responsive to Plaintiffs’ discovery requests existed. She learned that the CEAs are maintained in DJG’s accounting department. Upon her review of the accounting department files, she discovered twenty additional CEAs, which were then produced to Plaintiffs.

DJG did not dispute that it was obligated to produce the CEAs and conceded that it should have found and produced CEA 416 when it was first requested by plaintiffs. However, it argued that its failure to initially produce CEA 416 was the result of a mistake and not an attempt to conceal evidence, as plaintiffs asserted.

The court found that DJG had not willfully or intentionally concealed the document, and noted that plaintiffs had not established any prejudice. It concluded that plaintiffs’ requested sanctions were too harsh and out of proportion to DJG’s fault in not timely producing the CEA. Thus, it denied the motion for sanctions, except to the extent that plaintiffs would be allowed to recover their attorney fees and expenses.

The court explained why DJG’s eventual production of CEA 416 did not “absolve” DJG of liability:

[A]ttorneys have a duty to insure that their clients discharge in good faith their duties under the discovery provisions of the Federal Rules of Civil Procedure, as implemented by specific orders of this Court. “[P]arties cannot fail to produce highly relevant documents within their possession with impunity. Parties cannot be permitted to jeopardize the integrity of the discovery process by engaging in halfhearted and ineffective efforts to identify and produce relevant documents.”

(Footnotes and citations omitted.) The court concluded that DJG was not “sufficiently diligent in planning and executing an effective search for the CEAs requested by Plaintiffs in their First Request No. 13.” It further counseled:

Trial counsel have a duty to exercise some degree of oversight over their clients’ employees to ensure that they are acting competently, diligently, and ethically in order to fulfill their responsibility to the Court and opposing parties. Accordingly, trial counsel have the obligation to communicate with in-house counsel to identify the persons having responsibility for the matters that are the subject of the document requests and to identify all employees likely to have been authors, recipients or custodians of documents falling within the request. Trial counsel also have an obligation to review all documents received from the client to see whether they indicate the existence of other documents not previously retrieved or produced. The Court does not find that these duties were met here with respect to CEA 416 and the Court’s Order that DJG produce all documents responsive to First Request for Production No. 13.

(Footnotes omitted.)

The court concluded that “the type of drastic sanctions requested by Plaintiffs should be reserved for those egregious cases where a party has abused the discovery process–either through grossly negligent, reckless or willful conduct or by flouting court orders compelling compliance with discovery obligations. Those circumstances are not present here.”