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Bridgestone Americas, Inc. v. International Business Machines Corp.

United States District Court, M.D. Tennessee, Nashville Division

March 16, 2017

BRIDGESTONE AMERICAS, INC., Plaintiff,
v.
INTERNATIONAL BUSINESS MACHINES CORPORATION, Defendant-Counterclaim Plaintiff,
v.
BRIDGESTONE AMERICAS, INC. and BRIDGESTONE CORPORATION

          MEMORANDUM

          KEVIN H. SHARP UNITED STATES DISTRICT JUDGE

         Pending before the Court is Plaintiff Bridgestone Americas, Inc.'s (“BSAM”) Motion for Review of Order Granting Defendant's Motion to Preclude Plaintiff's Claim for Unearned Customer Awards. (Docket No. 506). Defendant International Business Machines, Corp. (“IBM”) filed a Response in Opposition. (Docket No. 521). For the following reasons, the Court will deny BSAM's Motion for Review and affirm the Magistrate Judge's Order.

         BACKGROUND

         Because the discovery process in this case has been incredibly complex and contentious throughout the past three and a half years and the Magistrate Judge has been intimately involved with the process, the Court herein adopts the Magistrate Judge's Order for reference to the factual background of the dispute currently before the Court. (See Docket No. 500 at 2-10). Following an analysis of the discovery dispute between the parties, on October 31, 2016, the Magistrate Judge issued an order “precluding BSAM from claiming or introducing at trial any evidence supporting its $29 million or $26 million claim for unearned customer awards.”[1](Docket No. 500 at 23). The Magistrate Judge found this to be an appropriate sanction under Rule 37(c)(1) and Rule 37(b)(2) of the Federal Rules of Civil Procedure because BSAM had “failed to provide a timely computation of this claim in its initial and supplemental disclosures, and that failure was not substantially justified or harmless. Further, BSAM failed to fully comply with a [January 12, 2016] discovery order which required BSAM to provide this computation by February 26, 2016.” (Id. at 24). The Magistrate Judge also found this sanction appropriate because BSAM's failure to provide the requested computation “put IBM and its experts at a severe disadvantage without good cause.” (Id.).

         BSAM claims that the Magistrate Judge made a factual error in considering IBM's Motion to Preclude Plaintiff's Claim for Unearned Customer Awards, by failing to consider a document that BSAM previously produced to IBM. (Docket No. 505 at 2). BSAM now requests review of the Magistrate Judge's Order based on the alleged factual error. BSAM claims that it complied with both its initial disclosure requirements and the January 12, 2016 Order by providing a timely calculation of the $29 million or $26 million amount. (Id.). It claims that it did so on May 29, 2015, when it provided a list of the customers in question, the amount received by each customer, and the total amount of $25, 775, 159.39. (Id. at 3). BSAM calls this previously produced document “Exhibit C.” (Id. at 3 n.7).

         LEGAL STANDARD

         “A district court normally applies a ‘clearly erroneous or contrary to law' standard of review for nondispositive preliminary measures.” Baker v. Peterson, 67 F. App'x 308, 310 (6th Cir. 2003) (citing Fed.R.Civ.P. 72(a)). “A district court must review dispositive motions under the de novo standard.” Id. The parties dispute whether the Magistrate Judge's Order precluding BSAM's claim for unearned customer awards is dispositive or nondispositive. Although the Magistrate Judge's Order may be read as implying dismissal of the potential unearned customer awards claim (and therefore dispositive), this Court finds the Order to be nondispositive for the following reasons.

         “[T]he Sixth Circuit has employed a functional equivalence analysis to determine whether a motion is dispositive or non-dispositive for purposes of review of a Magistrate Judge's decision. . . . Any motion not listed as dispositive in § 636(b)(1)(A) but functionally equivalent to a dispositive motion is deemed dispositive.” Cooper v. Shelby County, 2010 U.S. Dist. LEXIS 42290, *7 (W.D. Tenn. Apr. 28, 2010).

[M]otions for sanctions premised on discovery abuses are generally non-dispositive, parties may . . . ask the court to sanction the offending party by dismissing its claim. The majority of courts to consider the issue have concluded that when a party brings a motion for discovery sanctions, the sanction chosen by the magistrate judge . . . governs the magistrate judge's authority over the motion.

Bell-Flowers v. Progressive Ins. Co., 2005 U.S. Dist. LEXIS 37198, *2 n.1 (W.D. Tenn. Dec. 13, 2005); see also Nance v. Wayne County, 264 F.R.D. 331, 332 (M.D. Tenn. 2009) (citing Bell-Flowers for the proposition that “motions for sanctions premised on discovery abuses are non-dispositive unless sanction includes dismissal of claim”).

         As stated above, district courts reviewing a nondispositive magistrate judge order apply the clearly erroneous or contrary to law standard. “‘The clearly erroneous standard applies only to the magistrate judge's factual findings; legal conclusions are reviewed under the plenary contrary to law' standard. . . . Therefore, the reviewing court must exercise independent judgment with respect to the magistrate judge's conclusions of law.” Peterson v. Burris, 2016 WL 1458107, at *1 (E.D. Mich. Apr. 14, 2016) (quoting Haworth, Inc. v. Herman Miller, Inc., 162 F.R.D. 289, 291 (W.D. Mich. 1995)). “An order is contrary to law when it fails to apply or misapplies relevant statutes, case law, or rules of procedure.” Id. (quoting Ford Motor Co. v. United States, 2009 WL 2922875, at *1 (E.D. Mich. Sept. 9, 2009)).

         BSAM has claimed throughout discovery that the $26 or $29 million in unearned customer awards at issue “may or may not be a separate claim under some legal theory, ” but has never asserted the amount as belonging to a specific claim. (Docket No. 500 at 4). Consequently, there is no claim to be dismissed, nor is it functionally equivalent to dismissing a claim as BSAM never articulated any claim regarding this damage amount. (See Docket No. 500 at 24) (“Accordingly, IBM's motion to preclude BSAM's potential claim for unearned customer awards . . . is GRANTED.”) (emphasis added). Furthermore, the Court declines to allow a party to definitively assert a claim only after sanctions have finally been issued against the party. Such a holding would allow parties to recharacterize magistrate judges' orders as they please by claiming that an order is dispositive because it precludes claims they thought about potentially bringing. The Magistrate Judge's Order in this case is nondispositive, and the Court will apply the clearly erroneous or contrary to law standard.

         ANALYSIS

         The Magistrate Judge considered two separate issues: “(1) whether BSAM satisfied the Rule 26 initial disclosure requirements as to this $29 or $26 million claim of unearned customer awards and whether any failure was substantially justified or harmless; and (2) whether BSAM complied with the Court's January 12, 2016 discovery order concerning these unearned customer awards.” (Docket No. 500 at 13). The ...


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