LESLIE E. KOBAYASHI, District Judge.
Before the Court are the following appeals of orders issued by the magistrate judge:
-Defendant Precision Moving & Storage Inc.'s ("Defendant" or "Precision") appeal, filed on June 9, 2017, of the June 1, 2017 Order Granting Plaintiff's Motion for Protective Order and Sanctions for Discovery Abuse ("6/1/17 Order" and "6/1/17 Order Appeal"); [dkt. nos. 74, 76;]
-Defendant's appeal, filed on August 25, 2017, of the August 16, 2017 Memorandum Opinion and Order on Discovery Issues ("8/16/17 Order" and "8/16/17 Order Appeal"); [dkt. nos. 105, 124;
-Plaintiff Marine Lumber Co.'s ("Plaintiff" or "Marine") appeal, filed on August 31, 2017, of the August 17, 2017 Order Denying Plaintiff's Motion for Leave to Amend ("8/17/17 Order" and "8/17/17 Order Appeal"); [dkt. nos. 106, 130].
Plaintiff filed its response to the 6/1/17 Order Appeal on June 23, 2017, and Defendant filed its reply on August 29, 2017. [Dkt. nos. 79, 128.] Plaintiff filed its response to the 8/16/17 Order Appeal on September 8, 2017, and Defendant filed its reply on September 22, 2017. [Dkt. nos. 140, 151.] Defendant filed its response to the 8/17/17 Order Appeal on September 14, 2017, and Plaintiff filed its reply on September 28, 2017. [Dkt. nos. 146, 156.] The Court has considered the appeals as non-hearing matters pursuant to Rule LR7.2(e) of the Local Rules of Practice of the United States District Court for the District of Hawai`i ("Local Rules"). The 6/1/17 Order Appeal, the 8/16/17 Order Appeal, and the 8/17/17 Order Appeal are hereby denied for the reasons set forth below.
A settlement conference was originally scheduled for May 23, 2017, and the parties agreed to depose Edward McGrath, Plaintiff's party representative, in Hawai`i on May 24, 2017 because Plaintiff's lead counsel and Mr. McGrath — who both live in Oregon — would be in Hawai`i for the settlement conference. When the settlement conference was continued to June 6, 2017,
Two days before the scheduled deposition date, Plaintiff filed a Motion for Protective Order and Sanctions for Discovery Abuse ("Motion for Protective Order"). [Dkt. no. 69.] The magistrate judge granted the Motion for Protective Order, finding that there was good cause to prevent undue burden and expense. [6/1/17 Order at 5.] The magistrate judge awarded Plaintiff $2,500 in attorneys' fees and costs, finding that Defendant's objections to the proposed June 7, 2017 deposition date were not substantially justified. [
In the 6/1/17 Order Appeal, Defendant argues that: the magistrate judge erred in allowing Plaintiff to dictate the date of the deposition based on Plaintiff's preference; making Mr. McGrath and Plaintiff's counsel travel to Hawai`i for the May 24, 2017 deposition would not have an undue burden or expense because Plaintiff chose to file the case in Hawai`i; Plaintiff did not try to resolve the dispute without court intervention; and the fee award was unrelated to Mr. McGrath's deposition.
On April 28, 2017, Plaintiff's counsel requested to conduct depositions of various Precision personnel on June 8 and 9, 2017, i.e. following the June 7, 2017 settlement conference. Defendant's counsel did not inform Plaintiff's counsel until June 5, 2017 that Defendant's counsel and witnesses were not available on those dates, and counsel did not provide any explanation. [8/16/17 Order at 4-5.] "Precision, its counsel, and its corporate representative did not appear for the depositions." [
On July 3, 2017, Plaintiff filed a Motion to Hold Defendant in Contempt for Failure to Appear and for Sanctions for Discovery Abuse regarding the depositions noticed for June 8 and 9 ("Depositions Motion"). [Dkt. no. 80.] On July 7, 2017, Plaintiff filed a Motion for Sanctions for Discovery Abuse, arguing that sanctions were warranted because the majority of Defendant's written discovery responses were deficient. ("Sanctions Motion"). [Dkt. no. 82.] The magistrate judge granted both motions in part and denied them in part. [8/16/17 Order at 1.] The magistrate judge granted the Deposition Motion insofar as he ordered Defendant to pay: the expenses for new deposition dates, up to $1,500; and $1,500 in attorneys' fees and costs that Plaintiff incurred because of the missed June 8 and 9 depositions and in bringing the Depositions Motion. [
In the 8/16/17 Order Appeal, Defendant argues that: the order to provide additional discovery responses and the award of sanctions was not appropriate because the Sanctions Motion was not a motion to compel; the magistrate judge should not have ordered Defendant to supplement its responses to Plaintiff's requests for interrogatories and requests for admissions, and should not have awarded sanctions, because Defendant had already provided substantive responses in supplemental responses; and the magistrate judge's ruling regarding the June 8 and 9 depositions was inconsistent with his ruling in the 6/1/17 Order regarding the May 24, 2017 deposition of Mr. McGrath. Defendant argues that the inconsistency is evidence of favoritism toward Marine's mainland counsel.
On June 22, 2017, Plaintiff filed a Motion for Leave to Amend ("Motion to Amend"). [Dkt. no. 77.] Plaintiff sought leave to: add a claim for fraud in the inducement, with a prayer for punitive damages; add a claim for violation of the Uniform Commercial Code ("UCC"); and make various changes to "clean up" the Complaint, including adding a prayer for incidental damages, clarifying the existing prayer for interest, changing the terminology in the Complaint from "materials" to "goods", and adjusting the relevant date ranges. The magistrate judge denied leave to amend because the deadline to amend pleadings had passed and Plaintiff did not show that it was diligent in pursuing the new claims. The magistrate judge found that Plaintiff knew about the basis for the proposed fraud and UCC claims by October 2016 from Precision's answer and from the materials Defendant submitted in opposition to Plaintiff's Motion for Summary Judgment.
In the 8/17/17 Order Appeal, Plaintiff asserts that it was diligent in seeking to bring its new claims because discovery was stayed until this Court filed the Order Denying Plaintiff's Motion for Summary Judgment ("Summary Judgment Order") on March 28, 2017.
This district court has stated:
Defendant first argues that Plaintiff's request to continue Mr. McGrath's deposition from May 24, 2017 to June 7, 2017 was merely a matter of Plaintiff's preference. This argument is rejected because, as the magistrate judge found, the request was clearly based on the continuance of the settlement conference. [6/1/17 Order at 2.] Further the two-week delay was "relatively minor in the scope of this litigation." [
The magistrate judge also found that it was an undue burden and expense to require Plaintiff's lead counsel and Mr. McGrath to travel to Hawai`i for the May 24 deposition and again for the June 6 settlement conference, particularly because the deposition would have been unnecessary if the settlement conference was successful. [
Defendant's argument that Plaintiff's counsel did not attempt to resolve the issue without court intervention is also rejected. The magistrate judge found that Plaintiff's counsel made multiple attempts to confer with defense counsel in order to address the issue regarding Mr. McGrath's deposition, and it was defense counsel who refused to correspond with Plaintiff's lead counsel by email and was uncooperative when Plaintiff's lead counsel attempted to schedule a telephone conference. [
Defendant's final argument that the $2,500 award of fees and costs was unrelated to Mr. McGrath's deposition is also rejected. The Motion for Protective Order sought $5,000 in sanctions against Defendant. [Motion for Protective Order at 3.] Defendant incurred "in excess of $5,000 in attorney fees in [Mr. Stadtler's] ultimately unsuccessful efforts to confer with [defense] counsel about the disputed issue that gave rise to this Motion, and then in drafting this Motion, the supporting declarations, and compiling the exhibits." [Stadtler Protective Order Decl. at ¶ 10.] The implicit finding that Plaintiff incurred at least $2,500 in reasonable attorneys' fees and costs associated with Defendant's refusal to reschedule Mr. McGrath's deposition was not clearly erroneous, and the $2,500 award in the 6/1/17 Order was not contrary to law.
Defendant has failed to show that the 6/1/17 Order was clearly erroneous or contrary to law. Defendant's 6/1/17 Order Appeal is therefore denied, and the magistrate judge's 6/1/17 Order is affirmed.
In the 8/16/17 Order Appeal, Defendant first argues that the magistrate judge erred in construing the Sanctions Motion as a motion to compel. The Sanctions Motion primarily sought an order
[Sanctions Motion at 4.] Plaintiff also sought various other forms of relief as an alternative to terminating sanctions, including an order "striking Precision's boilerplate objections to Marine's admission and document production requests, and interrogatories, and requiring Precision to amend and supplement each of Precision's responses so as to directly respond to the request or interrogatory." [
Defendant next argues that the magistrate judge erred in ordering it to provide supplemental interrogatory responses because Defendant had already submitted supplemental interrogatory responses on July 5, 2017. [8/16/17 Order Appeal at 5.] Even if the magistrate judge erred by not acknowledging the submission of Plaintiff's July 5 supplemental interrogatory responses, the error was harmless. An award of attorneys' fees and costs incurred in bringing the Sanctions Motion was still warranted because the original interrogatory responses were deficient, and Plaintiff did not receive the supplemental responses after the Sanctions Motion was filed.
Finally, Defendant's argument that the 8/16/17 Order shows favoritism to Plaintiff because it is inconsistent with the 6/1/17 Order is also rejected. In both orders, the magistrate judge found that defense counsel's actions regarding the scheduling of the depositions at issue were not justifiable. Further, Plaintiff moved for a protective order prior to the scheduled May 24, 2017 deposition of Mr. McGrath, whereas Defendant did not do so prior to the scheduled depositions on June 8 and 9, 2017. The analysis in the two orders is consistent, and sanctions against Defendant were warranted in both instances.
Defendant has failed to show that the 8/16/17 Order was clearly erroneous or contrary to law. Defendant's 8/16/17 Order Appeal is therefore denied and the magistrate judge's 8/16/17 Order is affirmed.
Plaintiff argues that the 8/17/17 Order "turned solely on the question of whether [it] exercised reasonable diligence in seeking leave to amend," and Plaintiff "could not have reasonably met the March 24, 2017 deadline for the parties to amend their pleadings." [Mem. in Supp. of 8/17/17 Order Appeal at 9.] The magistrate judge found that Plaintiff was "aware of the facts and theories relevant to its fraud claim since at least October 2016." [8/17/17 Order at 3.] Plaintiff contends that this was clearly erroneous because neither Defendant's Answer nor the Summary Judgment Opposition were sufficient to make Plaintiff "aware of the facts and theories necessary to plead a fraud claim under Fed. R. Civ. P. 9(b)'s particularity pleading standard or a prayer for punitive damages under the wanton, oppressive, malicious, or willful standard." [Mem. in Supp. of 8/17/17 Order Appeal at 11-12.] The magistrate judge's finding that Plaintiff knew about the basis for a potential fraud claim before the post-summary judgment discovery was correct. Even if it is true that Defendant did not have enough facts until after discovery to satisfy the Rule 9(b) heightened pleading standard, that would not render the magistrate judge's finding that Plaintiff was not diligent in seeking leave to amend clearly erroneous.
After the 1/31/17 EO Ruling, Plaintiff was aware that the Motion for Summary Judgment would be denied in its entirety. At that point, the deadline to amend pleadings was still open. Plaintiff could have sought to have the stay lifted and the scheduling order amended because Plaintiff needed additional time before filing an amended complaint to conduct discovery regarding the possible fraud claim. Plaintiff did not do so, perhaps because it was hoping that this Court's written order addressing the Motion for Summary Judgment would ultimately be contrary to the 1/31/17 EO Ruling. At a minimum, Plaintiff could have moved to amend the scheduling order immediately after the filing of the Summary Judgment Order, which was issued only a matter of days after the deadline to add parties and amend pleadings had passed. In light of the stay and the issuance of the Summary Judgment Order, the magistrate judge presumably would have found good cause to amend the scheduling order and extended the deadline for Plaintiff to file its amended complaint. Plaintiff, however, did not move for an amendment of the scheduling order until it filed the Motion for Leave to Amend on June 22, 2017. [Dkt. no. 77.] Plaintiff had the proposed amended complaint prepared by the June 6, 2017 settlement conference, and showed it the magistrate judge and Defendant's counsel "in the lead up to" the conference. [Mem. in Supp. of 8/17/17 Order Appeal at 8.] Thus, Plaintiff was clearly working on the amended complaint well before June 6, 2017, even though the deadline to amend pleadings had closed. Plaintiff chose not to move to amend the scheduling order until June 22, 2017 — almost three months after the deadline to amend pleadings had passed. Under the circumstances of this case, the magistrate judge did not commit clear error when he found that Plaintiff was not diligent in seeking to amend its Complaint to add a fraud claim. Further, the magistrate judge's denial of leave to add the proposed fraud claim was not contrary to law.
The magistrate judge also found that Plaintiff was not diligent in pursuing the UCC claim. As noted by the magistrate judge, [8/17/17 Order at 5,] Plaintiff was aware of the basis for its potential UCC claim in October 2016. In its Summary Judgment Reply, Plaintiff argued that it should prevail on Count I — its breach of contract claim — because, under the UCC, the parties formed a contract and Defendant accepted the materials Plaintiff delivered. [Summary Judgment Reply at 6-8.] Plaintiff also argued at the hearing on the Motion for Summary Judgment that this Court should grant summary judgment as to Count I based on the UCC theory. [Trans. of 10/31/16 Hrg. on Motion for Summary Judgment, filed 11/18/16 (dkt. no. 42), at 6.] Plaintiff's argument was not addressed in the Summary Judgment Order because a UCC claim was not properly pled in the Complaint. Although Plaintiff was aware of the basis for its UCC claim in October 2016, it did not seek leave to amend until June 2017. The magistrate judge's finding that Plaintiff was not diligent in pursuing its UCC was not clearly erroneous. Further, the magistrate judge's denial of leave to add the proposed UCC claim was not contrary to law.
Finally, as to the proposed changes to "clean up" the Complaint, the magistrate judge found that Plaintiff was not diligent in bring those amendments because Plaintiff failed to identify either the facts it learned in discovery that supported the amendments or the reasons why it was unable to propose the amendments prior to the deadline to amend pleadings. [8/17/17 Order at 5.] Plaintiff has failed to present any reason why this findings were clearly erroneous. The magistrate judge's denial of leave to make the proposed "clean up" amendments was not contrary to law.
Because Plaintiff has not set forth any ground that warrants reversal of the 8/17/17 Order, Plaintiff's appeal is denied and the 8/17/17 order is affirmed.
On the basis of the foregoing, the following are HEREBY DENIED: Defendant's June 9, 2017 appeal of the magistrate judge's Order Granting Plaintiff's Motion for Protective Order and Sanctions for Discovery Abuse; Defendant's August 25, 2017 appeal of the magistrate judge's Memorandum Opinion and Order on Discovery Issues; and Plaintiff's August 31, 2017 appeal of the magistrate judge's Order Denying Plaintiff's Motion for Leave to Amend. The magistrate judge's orders are AFFIRMED, and Defendant is ORDERED to comply with the June 1, 2017 order and the August 16, 2017 order by the deadlines set forth in the instant Order.
IT IS SO ORDERED.
