DR Distribs., LLC v. 21 Century Smoking, Inc.
Decision Date | 19 January 2021 |
Docket Number | No. 12 CV 50324,12 CV 50324 |
Citation | 513 F.Supp.3d 839 |
Parties | DR DISTRIBUTORS, LLC, Plaintiff-Counterdefendant, v. 21 CENTURY SMOKING, INC., and Brent Duke, Defendants-Counterclaimants, v. CB Distributors, Inc., and Carlos Bengoa, Counterdefendants. |
Court | U.S. District Court — Northern District of Illinois |
Brian M. Gaynor, Nicoll Davis & Spinella LLP, Paramus, NJ, Robert Charles von Ohlen, Jr., Robert C. von Ohlen & Associates, Lake Forest, IL, Anthony J. Davis, Pro Hac Vice, Santomassimo Davis LLP, Parsippany, NJ, for Plaintiff-Counterdefendant DR Distributors, LLC.
Brian M. Gaynor, Nicoll Davis & Spinella LLP, Paramus, NJ, for Counterdefendants CB Distributors, Inc., Carlos Bengoa.
Kevin Bruce Salam, Law Offices of Kevin Salam, Michael Irving Leonard, Leonard Trial Lawyers LLC, John G. Bisbikis, LeonardMeyer LLP, Chicago, IL, for Defendants-Counterclaimants.
"Snakebit"—That's how a former defense counsel described this case. But "snakebit" connotes the unfortunate circumstances that befall unsuspecting victims. That didn't happen here. Instead, through a series of missteps, misdeeds, and misrepresentations, Defendants and the former defense counsel find themselves looking down the barrel of a sanctions motion Howitzer. If any entity has been snakebit, it's this Court.
This case has taught this Court that—like Boxer the Horse in Animal Farm —it cannot solve all problems by just working harder. No matter how hard this Court tried to move this case to a just, speedy, and inexpensive determination, it was thwarted. This case is evidence that early and constant case management does not necessarily result in a prompt resolution or avoidance of problems.
This case was filed eight years ago in 2012. There are over 400 docket entries now. And no end is in sight. The case was assigned to the undersigned in 2014, while a summary judgment motion was pending before the then District Judge. In keeping with this Court's practice of active (perhaps hyperactive) case management, immediately upon the transfer of the case, this Court held an in-person status conference.1 At this conference, this Court specifically addressed electronic discovery issues. The Court asked counsel if litigation holds were issued. Dkt. 367, at 6. No one informed the Court that they had not been issued. It turns out, defense counsel issued no written litigation hold to Defendants. The Court warned that it did not want to have a problem because of the lack of litigation holds. Id. The Court then asked each side if the record custodians had been identified. Defense counsel said they were and identified Brent Duke as the custodian. The Court asked defense counsel if Duke was sufficiently knowledgeable with electronically stored information (ESI). Id. at 7. Defense counsel said that Duke was generally knowledgeable. To drill down, the Court specifically asked if Duke were asked about metadata and native applications, would Duke understand those terms. Defense counsel said generally he would. Id. As will be shown below, Duke's purported knowledge of ESI is now hotly debated. The Court then asked the parties how they intended to search for ESI, whether through search terms or predictive coding/technology assisted review. The parties said that they had not yet discussed that issue. The Court then specifically ordered the parties to "reconvene a 26(f) conference to discuss e-discovery issues in detail with custodians for each side." Dkt. 78 (emphasis added). In ordering the parties to engage in this process—one mandated by the Federal Rules of Civil Procedure—the Court said that it did not want to have "an e-discovery snag ... [that] throws the entire schedule out the window." Dkt. 367 at 9. If that initial status hearing and court order did not place all counsel, and specifically the former defense counsel, on notice that ESI was an important issue to this case and to this Court and that e-discovery should be taken seriously, the Court is at a loss as to what else it could do to notify them.
As anticipated in a previous order, DR Distribs., LLC v. 21 Century Smoking, Inc. , No. 12 CV 50324, 2015 WL 5123652, 2019 U.S. Dist. LEXIS 22404 (N.D. Ill. Feb. 12, 2019), currently pending before the Court is Plaintiff's motion for sanctions relating to the failure to timely produce ESI and for the spoliation of ESI as well as other alleged misdeeds. Plaintiff has requested a full arsenal of sanctions weapons, including civil contempt, inherent authority, 28 U.S.C. § 1927, and Federal Rules of Civil Procedure 11, 26(g), 37, and 56(h). Dkt. 294. According to Plaintiff, because of Defendants’ and the former defense counsel's actions and inactions, the only reasonable sanction is defaulting Defendants and dismissing their counterclaims. (Occasionally, these sanctions are referred to as the "nuclear option[s]." Gerace v. Andrews , No. 16 C 721, 2017 WL 1822290, at *1, 2017 U.S. Dist. LEXIS 68790, at *1 (N.D. Ill. May 5, 2017). Defendants and the former defense counsel now unreasonably assert that modest sanctions, at most, should be imposed. This assertion is contrary to one of the former defense counsel's confession that he "would be hard pressed to say there shouldn't be sanction on this." Dkt. 315, at 9. Apparently, once the lawyers lawyered up, they changed their tune.
The issue for this Court is to determine in its discretion what, if any, sanctions should be imposed, against whom, and under what authority. In deciding this issue, the Court held five days of evidentiary hearings, admitted voluminous documents into evidence, and carefully listened to the testimony of witnesses and...
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