Episode 94: Sanctions for Defendants’ Expert Use of Late Documents

The road to 100 continues in our Case of the Week Series, and in the latest episode we have another decision in what has become the DR Distributors miniseries. In Episode 94, we’ll review Judge Johnston’s decision on a second motion for sanctions for defendant’s expert’s use of documents produced after the January 19, 2021 decision.

Continue reading or watch the video to learn more about the ediscovery issues in this matter.

Introduction

Hi and welcome to Episode 94 of our Case of the Week series, published in partnership with ACEDS. My name is Kelly Twigger. I am the CEO and founder of eDiscovery Assistant and the principal at ESI Attorneys. Thanks so much for joining me today. I’m really happy to be here with you.

One event to make note of before we dive in. The University of Florida (Levin College of Law) eDiscovery Conference is coming up this year to be held February 8 and 9th in Gainesville, Florida. But you can also attend virtually. We are back to our pre-Covid status of having roughly 150 to 200 people in person and then have it streaming. Our registration figures I believe are up in the 3000 range. So, we hope you’re planning to join us.

Our 2022 Case Law Report should be out in the next couple of weeks. It will also be distributed as part of the materials for the University of Florida Levin College of Law eDiscovery Conference.

All right let’s dive into this week’s decision. As I mentioned, this is the latest decision in the saga that has become DR Distributors. In this latest decision, United States District Judge Iain Johnston granted plaintiff’s motion to strike DR Distributors expert report after it relied on documents produced after June 1, 2015, in violation of the Court’s order of January 19, 2021. The Court also ordered sanctions against DR Distributors for the violation of that order.

Facts

Let’s go back for a minute to Judge Johnston’s decision of January 19, 2021 on Century Smoking’s motion for sanctions. We covered that ruling on two separate episodes of our Case of the Week series relatively early. Those were episodes 12 and 13.

That was a 256-page decision in which the Court essentially wrote a textbook on the various bases for sanctions that are available under the Federal Rules of Civil Procedure and his authority on each area. The Court also found a tremendous amount of sanctions to be awarded as a result of that motion for sanctions, which he granted. We covered that decision more recently, I think, on episode 74. In terms of the sanctions that were awarded was roughly $2.4 million.

We are revisiting that order again, because in this current motion, the Judge notes that the language from that order precluded DR Distributors “from using any information not disclosed to the plaintiff by June 1, 2015.” And it precluded defendant’s experts from “testifying that their opinions would not change had they considered the documents and information not disclosed before June 1, 2015.” That’s the language from the order that’s at issue on this current motion to strike and the second motion for sanctions.

Following the sanctions Order on January 19, 2021 for failure to preserve data, DR Distributors suddenly identified 20 bankers boxes of documents that were previously produced, yet were subject to that Order. Century Smoking (the plaintiff) then filed a second motion for sanctions following the production of those documents. DR Distributors responded to the motion for sanctions by including a new expert report to allegedly contradict Century Smoking’s “unsupported opinions and arguments” in the sanctions motion.

That expert report included three opinions, all of which were based on analysis of documents that were not disclosed prior to the June 1, 2015, cut off, as required by the January 2021 Order from the Court. The first opinion in the expert report was a reiteration of an earlier opinion, but the Court found that it was still based on new analyses that were conducted on documents that were produced after the June 2015 date.

The second and third opinions in the expert report were completely new and also based on an analysis of documents that DR Distributors admitted were not disclosed prior to June 1, 2015. The defendant argued that the expert relied only on one log that was produced in March of 2021—still six years after the cutoff date—and a copy of the backup log that the expert found in backup files as part of his initial review. So, in essence, the defendants are saying there’s really only one log that the expert’s relying on that was outside the dates.

Century Smoking responded to the motion to strike and, as the Court notes, “blew a gasket” — noting the language of the Court’s January 19, 2021 order. So now we have a motion to strike wrapped up in a second sanctions motion and “in an effort to stop the never-ending filings in this case” the Court combined the two motions.

DR Distributors then filed its own motion to strike plaintiff’s reply brief or be allowed to file a sur-reply, arguing that the reply brief filed by Century Smoking contained new arguments. Defendant’s brief in support of this new motion to strike effectively acted as a response to Century Smoking’s motion to strike.

We’ve got motion for sanctions, Century Smoking’s motion to strike, and then DR Distributors motion to strike. This ruling from the Court resolves all three of those particular decisions.

Court’s Analysis

The Court’s analysis really comes down to looking at the language of the order. As you might imagine, at this point, the Court is furious and notes that it has already warned the parties about, “frivolous and unreasonable filings, that sanctions will be payable to the Court going forward, and that DR Distributors had not heeded its warnings based on these latest filings.”

The Court then looks at the expert report and defendant’s brief relative to his January 19, 2021 Order and states that not only do the new filings violate the Court’s 2021 Order, but defendants “attempt to argue the contrary is simply gaslighting.” That’s my favorite quote of this particular decision.

The Court goes on to note that the expert defied the Order both by stating that his opinion had not changed based on a review of the new information, but most importantly, that all three opinions were based on an analysis of data produced in late 2015 and early 2016, as well as in March 2019. The Court’s response noting that all three dates are after the June 1, 2015 cutoff date and citing 7th Circuit case law was that “it doesn’t take Captain Obvious to know that this is the direction of time’s arrow.” The Court sums up its analysis by saying that, “Defendants and counsel were warned. They had an opportunity to respond. The response was meritless sanctions are necessary.”

We’ve got granting of a motion for sanctions. The question is, what is the remedy on that motion for sanctions? The Court strikes the expert report that relied on the documents that were produced late and the portions of defendant’s brief that also relied on that report. The Court then noted that it has both inherent authority and authority under Rule 37(b) to impose remedial sanctions for violating Court orders.

Judge Johnston states that the defendant’s action of intentionally using information that they were specifically prohibited from using easily overcomes the fault and negligence standards that are required under Rule 37. Then the Court evaluates the hourly rate of the Court’s time in having to review these papers and issue a decision, and notes that at approximately $600 an hour and having spent at least 10 hours of time, the Court sanctions DR Distributors and its counsel jointly and severally for $6,000 to be paid to the Court within 30 days. The Court closes its decision by saying that “sanctions, including monetary, will continue to be entered as needed.”

Takeaways

What are our takeaways from this decision? Well, the entertaining nature of the DR Distributor saga never ceases to amaze me. But in this particular case, we really need to focus on what are the practical takeaways from this decision, from counsel’s behavior of failing to essentially go along with a court order.

The goal of any litigator should be to never have a court refer to your argument as “gaslighting.” The term gaslight means to manipulate someone using psychological methods into questioning their own sanity or powers of reasoning. That’s not what you want to hear from a federal judge.

There’s no question here that the defendants knew that they would be violating the Court’s order. We do know that there were some counsel changes during this saga, and that may have contributed. But my guess here is that without an expert report, DR Distributors is facing a much greater cost than any sanctions that could be awarded by the court and was willing to take that chance.

That’s fine, but you have to understand that as counsel, you’ve got reputational considerations to be made here, and that is that you’ve gone before a federal judge, intentionally violated an order, and been sanctioned. This is a client that’s been sanctioned multiple times and has engaged in multiple instances of essentially inappropriate behavior with the court. And you’ve got some serious ethical considerations to consider here.

We’ll keep an eye on this case to see whether the saga continues or whether Judge Johnston finally gets some much-needed peace in this case.

Conclusion

That’s our Case of the Week for this week. Thanks so much for joining me. We’ll be back again next week with another decision from our eDiscovery Assistant database.

If you’re interested in doing a free trial of our software or case law, sign up to get started. Alternatively, you can email us at support@ediscoveryassistant.com.

Thanks so much. Have a great week.