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Phipps v. Accredo Health Group Inc.

United States District Court, W.D. Tennessee, Western Division

February 21, 2017

TABITHA PHIPPS, Plaintiff,
v.
ACCREDO HEALTH GROUP, INC.; EXPRESS SCRIPTS ADMIN., LLC a/k/a EXPRESS SCRIPTS, Defendants.

          ORDER GRANTING IN PART, DENYING IN PART PLAINTIFF'S EMERGENCY MOTION FOR SANCTIONS AND SUPPLEMENTAL MOTION FOR SANCTIONS

          S. THOMAS ANDERSON UNITED STATES DISTRICT JUDGE.

         Before the Court are Plaintiff Tabitha Phipps's Emergency Motion for Sanctions (ECF No. 113) filed on July 12, 2016, and Supplemental Motion for Sanctions (ECF No. 158) filed on November 21, 2016. Defendant Accredo Health Group, Inc. has responded in opposition to both Motions.[1] Plaintiff has filed a reply in support of both Motions, and Defendant has filed a sur-reply in opposition to the Supplemental Motion for Sanctions. For the reasons set forth below, Plaintiff's Motions are GRANTED in part, DENIED in part.

         BACKGROUND

         Plaintiff's Amended Complaint (ECF No. 28) alleges claims against Defendants for violations of the Family Medical Leave Act (“FMLA”) and the Fair Labor Standards Act (“FLSA”), among other claims arising out of Plaintiff's former employment with Defendant. On June 20, 2016, the Court entered an order granting Defendant's motion for summary judgment on all of Plaintiff's claims except for her FMLA claims. At that time, the case was set for trial on July 18, 2016. At the pretrial conference on July 7, 2016, Plaintiff reported that Defendant had produced a number of relevant emails the evening before the conference. The Court advised Plaintiff to file an appropriate motion, and Plaintiff's Emergency Motion for Sanctions followed. Plaintiff' Emergency Motion argued that Defendant failed to comply with its discovery obligations under the Federal Rules of Civil Procedure. As a sanction, Plaintiff requested entry of default judgment against Defendant on her claims for FMLA retaliation and interference as well as a claim the Court had dismissed at summary judgment, the FLSA retaliation claim. In the alternative, Plaintiff requested a continuance of the trial, a re-opening of discovery, a setting aside of the Court's summary judgment ruling on the FLSA claim, and an award of attorney's fees and expenses incurred in the extended discovery period.

         Following a hearing on Plaintiff's motion, the Court continued the trial and granted Plaintiff's request to re-open discovery for the limited purpose of exploring the late disclosure of the evidence on July 6, 2016, and any relevance the new evidence might have to Plaintiff's claims for relief. The Court entered a revised schedule, gave Plaintiff until October 24, 2016, to file a supplemental brief in opposition to Defendant's motion for summary judgment, and reset the trial for March 6, 2017. The Court reserved its ruling on any additional sanctions at that time. Under the new schedule, the parties had until October 10, 2016 to complete additional discovery. At the conclusion of the extended discovery period, the parties filed supplemental briefs on Plaintiff's FLSA claim (ECF Nos. 156, 157, 160, 161), [2] and Plaintiff filed her Supplemental Motion for Sanctions.

         Plaintiff's Supplemental Motion for Sanctions renews her request for entry of default judgment against Defendant. For support Plaintiff argues that new discovery shows Defendant spoliated electronically-stored information. According to Plaintiff, Defendant failed to take reasonable steps to preserve relevant emails, specifically the emails of a former HR employee Cynthia Thompson, by placing an appropriate litigation hold. Plaintiff argues that Defendant had the ability to comply with its discovery obligations but failed to do so. Plaintiff further argues that all of the other factors weigh in favor of the sanction of default judgment.

         In its response brief, Defendant reports that “it was discovered on December 1, 2016 that Ms. Thompson's emails still exist.”[3] Defendant's general procedures for the storage and preservation of employee email include deleting emails stored in an “Enterprise Vault” after a period of 6 months. Defendant discovered, however, “that, to some extent and at some point in time, its normal practice of automatically deleting emails held in storage in its ‘Enterprise Vault' after a six-month period had been discontinued due to another litigation matter.”[4] In short, the emails still exist. Defendant explains that counsel with the assistance of a third-party vendor searched Thompson's emails and produced 94 relevant emails and attachments that had not been previously produced in discovery. Plaintiff received these emails on December 19, 2016. Defendant argues that Plaintiff has not shown then that Defendant spoliated the emails. Defendant also states that it still has possession of emails sent and received by Plaintiff herself and another individual previously identified in discovery Jim Zaitz. Defendant argues that production of these emails would not be proportional to the needs of the case.

         In her reply brief, Plaintiff states that the late production of the Thompson emails materially changes the facts of the case. Plaintiff believes that the emails now show that Defendant was considering discipline against Plaintiff short of termination. Plaintiff contends that counsel for Defendant had a non-delegable duty to determine whether the emails existed. The late discovery of the Thompson emails and other emails is at odds with Defendant's previous discovery responses and the testimony of Defendant's Rule 30(b)(6) representative. And even if Defendant did not take appropriate steps to locate the emails during the regular discovery period, Defendant certainly had a duty to find the emails once Defendant realized in July 2016 that it had not produced all relevant discovery to Plaintiff. Plaintiff argues that under the circumstances default judgment continues to be the most appropriate sanction. If the Court declines to enter default judgment against Defendant, Plaintiff requests that the Court re-open discovery yet again and allow Plaintiff to file another brief in support of her FLSA claim.

         Defendant has filed a sur-reply, arguing that Plaintiff has not carried her burden to show why sanctions are appropriate under Federal Rule of Civil Procedure 37. Defendant maintains that it “has, in fact, complied with its discovery obligations under the federal rules” by “timely supplementing its disclosures in July 2016 and December 2016.”[5] Defendant further maintains that its December 2016 disclosures complied with Local Rule 26.1(d), which allows parties to make supplemental disclosures up to 30 days before trial. Defendant disclosed the documents as soon as counsel learned about their existence. Defendant explains that a paralegal in Defendant's in-house legal department was not previously aware that Defendant's normal email retention policy was not in effect due to a litigation hold in another matter. Plaintiff has failed to show then that Defendant acted in bad faith, a prerequisite to the imposition of sanctions. Defendant also restates its position that review and production of the thousands of emails associated with Plaintiff's former email account and the account of Jim Zaitz should not be required because the discovery is not proportional to the needs of the case.

         STANDARD OF REVIEW

         The Court has the inherent authority to dismiss a party's claims or enter default judgment against a party as a sanction for discovery abuse but only “when a party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons” or “when the conduct is tantamount to bad faith.”[6] The Federal Rules of Civil Procedure grant the Court similar authority to impose appropriate sanctions, including entry of default judgment, for a party's violations of its disclosure and discovery obligations under the rules. Pursuant to Rule 37(b), the sanction of default judgment is appropriate only on the consideration of four factors, including the party's culpable conduct.[7] The Sixth Circuit has commented that “[j]udgment by default is a drastic step which should be resorted to only in the most extreme cases.”[8] Even so, it is not an abuse of discretion for a district court to enter default judgment where a “party has the ability to comply with a discovery order and does not.”[9] In the final analysis, “[e]ntry of a default judgment against a party for failure to cooperate in discovery is a sanction of last resort, and may not be imposed unless noncompliance was due to willfulness, bad faith, or fault.”[10]

         ANALYSIS

         I. Default Judgment

         The issue presented is whether the sanction of default judgment is merited for Defendant's failure to disclose discoverable emails in a timely manner. The Court's Rule 16(b) case management order, as amended (ECF No. 51), set March 2, 2016, as the deadline for completing all discovery and April 26, 2016, as the deadline for supplementation under Rule 26(a)(2). Despite the April 2016 deadline for supplementing discovery responses, Defendant disclosed a small number of emails associated with the email account of Jodi Bruhn in July 2016, over two months after the deadline passed, long after the parties had fully briefed a motion for summary judgment, and just two weeks before the trial. Defendant now claims that its failure to produce the emails was inadvertent. According to an affidavit from Cynthia Foster, a senior paralegal employed by Express Scripts, Inc. (ECF No. 168-2), Foster collected electronically stored communications relevant to Plaintiff's claims in May 2014. Presumably among the documents collected at that time were the Bruhn emails, although Foster's affidavit does not actually make this specific claim. Foster avers that she learned that the Bruhn emails had not been produced during discovery for the first time on July 6, 2016.

         Defendant has since disclosed many more emails, this time associated with the account of a former employee Cynthia Thompson. In the aftermath of the late disclosure of the Bruhn emails, the Court allowed Plaintiff to re-open discovery as to the Bruhn emails and the circumstances surrounding their late disclosure. Not only were the Thompson emails outside of the limited scope of the extended discovery period, but Defendant produced the emails for the first time on December 19, 2016, more than two months after the extended discovery period had closed. Concerning the late production of the Thompson emails, Foster states in her affidavit that she “recently became aware that Express Scripts' standard practice of automatically purging emails from its Enterprise Vault storage system, after six months, had been discontinued as a result of another litigation matter.”[11] Foster states that she learned on December 1, 2016, that Cynthia Thompson's emails were stored on the company's Enterprise Vault system. The Court would add that Defendant discovered emails associated with Plaintiff's former Accredo account at the same time it discovered the Thompson emails, though Defendant has yet to produce Plaintiff's emails.[12]

         The Court finds that Defendant's conduct raises a number of serious concerns. First, Defendant has not shown good cause for its failure to comply with the Court's deadline for supplementing discovery responses. The Court ordered the parties to supplement all discovery responses under Rule 26(e)(2) by April 26, 2016. Defendant's disclosures of the Bruhn emails and Thompson emails occurred far outside of this deadline.[13] Rule 37(c)(1) allows the Court to impose sanctions for a failure to supplement, and Rule 16(f) permits the Court to sanction a party for failure to comply with a scheduling order deadline.[14] In addition to Defendant's ongoing to duty to supplement discovery responses, counsel for Defendant signed Defendant's discovery responses, certifying that they were complete and correct. Federal Rule of Civil Procedure 26(g) requires that an attorney of record sign each discovery response, certifying that “to the best of the person's knowledge, information, and belief formed after a reasonable inquiry” that a disclosure “is complete and correct as of the time it is made.”[15] Counsel and counsel alone had at all times an affirmative, non-delegable duty to conduct a reasonable inquiry to ensure that Defendant's discovery responses were complete and correct. Nothing in Defendant's ...


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