W.D.N.C.: Motion for Dismissal Unreasonable Even Where Discovery Violations Run Rampant

Last week, Magistrate Judge Lauren F. Louis issued a decision, Marine Depot Int'l, Inc. v. James River Grp., Inc., No. 19-CV-24821, 2020 U.S. Dist. LEXIS 244385 (W.D.N.C. Dec. 30, 2020) granting in part and denying in part the Defendant's motion for sanctions and dismissal under Federal Rule of Civil Procedure Rule 37. The Plaintiff was previously fined for canceling a deposition without giving sufficient notice; producing documents in an unusable format; and not conducting expert disclosure correctly pursuant to Rule 26.


The Plaintiff's second amended disclosures failed to provide the value for some of the damages it requested for lost profits and lost opportunities as required by Rule 26(a) and the documentation on which those damages calculations are based as required by Rule 34. Judge Louis denied the Defendant's motion for dismissal since the Plaintiff was not found to have acted in bad faith, but ordered that the Plaintiff be precluded from using evidence at trial of damages which are not described in its disclosures.


The Defendant also argued that the Plaintiff failed to search its computers and servers for relevant ESI, noting the absence in its production of communications about the purchase of a company. The Plaintiff's suit alleges breach of contract for the Defendant's failure to purchase the company. The Plaintiff countered that all documents relating to this company were saved on web-based applications (mainly email accounts) pursuant to James River Group's own policy. The Court denied the motion for sanctions on this basis since Rule 34 does not state how a party is to locate responsive documents. ". . . the Court will not require Plaintiff to conduct additional discovery where Defendant has not provided any factual basis for its belief that the additional search of Plaintiff's server is necessary, or to rebut Plaintiff's sworn testimony that there are no relevant, non-duplicative documents stored there." Id. at *11-12.


Partial fees were awarded to the Defendant for its work on its motion for sanctions on the basis of the fact that the, "Plaintiff's discovery violations ran rampant" and a new discovery violation was uncovered at the hearing. However, the Defendant's full fees were not awarded because it sought dismissal which was "an unreasonable expectation here", and the time incurred [67.4 hours] was not reasonable. Id. at *13-14. Judge Louis did not give much weight to the Plaintiff's ability to pay because of its repeated failure to meet its discovery obligations.