Unlimited Holdings, Inc. v. Bertram Yacht, Inc.

• Decision Date: 15 October 2008
• Docket Number: Civil No. 2005–46.
• Citation: 50 V.I. 727
• Parties: UNLIMITED HOLDINGS, INC., Plaintiff, v. BERTRAM YACHT, INC., Feretti Group USA, Inc., and CCP, Inc., d/b/a Cook Composites Polymers, Defendants.
• Court: U.S. District Court — Virgin Islands

50 V.I. 727

UNLIMITED HOLDINGS, INC., Plaintiff,

v.BERTRAM YACHT, INC., Feretti Group USA, Inc., and CCP, Inc., d/b/a Cook Composites Polymers, Defendants.

Civil No. 2005–46.

District Court of the Virgin Islands, Division of St. Thomas and St. John.

Oct. 15, 2008.

Lee J. Rohn, Esq., St. Croix, U.S.V.I., Gregory H. Hodges, Esq. St. Thomas, U.S.V.I., for the plaintiff.

John H. Benham, Esq., St. Thomas, U.S.V.I., for defendants, Bertram Yachts, Inc., Ferretti Group USA, Inc., and Ferretti S.p.A., Inc.

Karin A. Bentz, Esq., St. Thomas, U.S.V.I., for defendant CPP, Inc., d/b/a/ Cook Composites Polymers.

MEMORANDUM OPINION

GÓMEZ, C.J.

Defendants Bertram Yacht, Inc. (“Bertram”) and Ferretti Group USA, Inc. (“Ferretti USA”) (together, the “Defendants”) have filed objections to the Magistrate Judge's October 1, 2008, Order denying their motions for sanctions and for a protective order and granting the motion of the plaintiff Unlimited Holdings, Inc. (“Unlimited”) to extend certain discovery deadlines. For the reasons stated below, the Court will vacate the October 1, 2008, Order.

I. FACTUAL AND PROCEDURAL BACKGROUND

The Court has recited the facts of this matter in other rulings and therefore recites only those facts that are necessary to resolve these objections.

On June 26, 2008, the Court issued a Scheduling Order in which it required fact discovery to be completed no later than August 18, 2008 and expert witness depositions to take place no later than October 1, 2008. The Court also scheduled the trial of this matter for December, 2008.

On July 11, 2008, the Defendants noticed a Rule 30(b)(6) ¹ deposition of a designated representative of Unlimited for August 15, 2008.

On August 14, 2008, Unlimited filed a motion to modify the Scheduling Order by extending the deadlines therein. Also on August 14, 2008, Unlimited filed a motion for a protective order, seeking relief from the deposition noticed for August 15, 2008. The Defendants filed an opposition to that motion.

On August 26, 2008, the Defendants moved the Court to impose sanctions on Unlimited for Unlimited's alleged failure to comply with the Scheduling Order by not attending the August 15, 2008, deposition. In their motion, the Defendants asserted that dismissal of Unlimited's claims was the appropriate sanction. Unlimited filed an opposition to the motion for sanctions, explaining that the expectations of the Scheduling Order are untenable and that the Defendants knew that Unlimited could not attend the August 15, 2008, deposition.

On September 4, 2008, the Magistrate Judge entered an Order, finding Unlimited's motion for a protective order moot. The next day, the Magistrate Judge vacated that Order and ordered that the deposition of Unlimited's representative would take place on September 20 or 21, 2008. On September 16, 2008, the Defendants noticed Unlimited's deposition for September 21, 2008.

On September 17, 2008, Unlimited filed a notice that it planned to take the depositions of Bertram and Ferretti for October 4, 2008 and October 3, 2008.

On September 24, 2008, the Magistrate Judge held a status conference with the parties and entered a Minute Order, indicating that the deposition of Unlimited's representative had been completed.

On September 26, 2008, the Defendants moved for a protective order with respect to the depositions noticed for October 3 and 4, 2008. The Defendants asserted that those dates exceeded the August 18, 2008, fact discovery deadline set forth in the Scheduling Order and that the deposition notices covered topics that exceeded the permissible scope of discovery.

On October 1, 2008, the Magistrate Judge entered an Order containing various rulings. That Order granted Unlimited's August 14, 2008, motion for an extension of time and allowed fact discovery and expert witness depositions to be completed no later than October 10, 2008. The Order further denied the Defendants' motions for sanctions insofar as that motion sought dismissal but allowed the Defendants reimbursement for reasonable attorneys' fees and costs incurred in connection with the deposition noticed for August 15, 2008, upon proper application. The Order also denied the motion for a protective order and required the October 3, and 4, 2008, depositions to proceed, but granted the motion with respect to certain topics the Magistrate Judge considered privileged or otherwise not subject to discovery.

On October 2, 2008, the Defendants filed objections to the Magistrate Judge's October 1, 2008, Order. The Magistrate Judge stayed his Order pending the outcome of these objections.

II. DISCUSSION

Under Federal Rule of Civil Procedure 72(a), “[a] party may serve and file objections to the order within 10 days after being served with a copy.” Fed.R.Civ.P. 72(a); see also L.R.Ci. 72.2(b)(3)(A) (1993). “The district judge in the case must consider timely objections and modify or set aside any part of the order that is clearly erroneous or is contrary to law.” Id.

III. ANALYSIS

The Defendants challenge three portions of the Magistrate Judge's Order.

A. Sanctions

First, the Defendants object to the portion of the October 1, 2008, Order that relates to the denial of the Defendants' motion for sanctions.² They contend that the motion for sanctions constituted a dispositive motion, over which the Magistrate Judge had no jurisdiction. The Defendants also assert that, in considering the propriety of the sanction, the Magistrate Judge failed to consider the factors articulated by the Third Circuit in Poulis v. State Farm Fire & Casualty Co., 747 F.2d 863 (3d Cir.1984).³

The Defendants' “Motion for Sanctions” sought relief pursuant to Federal Rule of Civil Procedure 16(f), which governs sanctions for discovery violations. Specifically, the Defendants requested that the Court dismiss all of Unlimited's claims against them as a sanction for the alleged discovery violation.

A magistrate judge may hear and determine most nondispositive matters pending before the court. See28 U.S.C. § 636(b)(1)(A)⁴; Fed.R.Civ.P. 72(a); LRCi 72.1. For dispositive pretrial and post-trial matters, “the magistrate is authorized only to hold an evidentiary hearing on the matter, ... propose ... findings of fact and to recommend a disposition of the matter [,] ... subject to de novo review by the district court.” McLeod, Alexander, Powel & Apffel, P.C. v. Quarles, 925 F.2d 853, 854–55 (5th Cir.1991) (referring to the dispositive matters described in Section 636(b)(1)(B)). Additionally, “if the parties consent, under [ Section] 636(c) a magistrate may conduct any and all proceedings in any civil matter referred to it by the district court, including trial, and enter judgment for the court.” Id.

Absent consent by all parties, dispositive matters may only be resolved by a district judge. See28 U.S.C. § 636(c)(1); Nat'l Labor Relations Bd. v. Frazier, 966 F.2d 812, 816 n. 2 (3d Cir.1992) (explaining that a magistrate judge may not resolve dispositive matters unless all parties to the litigation consent). A dismissal of a plaintiff's claims under any rule or doctrine—including as a sanction for violation of a scheduling order—is essentially a ruling on a dispositive motion. See28 U.S.C. § 636(b)(1)(A) (explaining that a motion “to involuntarily dismiss an action” is a dispositive matter, upon which a magistrate judge lacks the authority to rule); see also In re U.S. West, Inc. Securities Litigation, 65 Fed. Appx. 856, 860 (3d Cir. May 30, 2003) (unpublished) (“A motion to dismiss is a dispositive motion....”).

The record in this case reveals no evidence of the parties' written consent to the Magistrate Judge's authority to rule on a document captioned as a motion for sanctions, but which functioned as a motion to dismiss. Nor does the record reflect a referral of that motion for sanctions by the District Judge to the Magistrate Judge.⁵ The Magistrate Judge therefore lacked jurisdiction to rule on the Defendants' motion for sanctions. See, e.g., Aldrich v. Bowen, 130 F.3d 1364, 1365 (9th Cir.1997) (“The Magistrate Judge had no jurisdiction to hear the case because the record contains no written consent of the parties as required by 28 U.S.C. § 636(c)(1) and Fed.R.Civ.P. 73(b).”); Parks By and Through Parks v. Collins, 761 F.2d 1101, 1106 (5th Cir1985) (“[T]he magistrate did not have authority ... to grant [dispositive relief] for two reasons. First, ... is the lack of any order of reference from the district judge.... Second, ... we find no indication that the parties to the garnishment action consented to have the magistrate rule on the 60(b) motions.”).

Accordingly, the Court will vacate the portion of the October 1, 2008, order denying the Defendants' motion to dismiss Because the Defendants' motion is therefore effectively revived, the Court will conduct a de novo review of that motion. See First Union Mortg. Corp. v. Smith, 229 F.3d 992, 995–97 (10th Cir.2000) (holding that, because all parties failed to consent to the magistrate judge's authority to enter a dispositive order, the district court was required to conduct a de novo review of the determination of the basis for such order); Collins, 761 F.2d at 1107 (“Should the district court conclude no such authority existed, it would then be proper for it to vacate the magistrate's order and proceed to decide the motions anew.”).

A party may move the Court to impose sanctions for violations of pretrial scheduling orders, pursuant to Rule 16(f):

On motion or on its own, the court may issue any just orders, including those authorized by Rule 37(b)(2)(A)(ii)-(vii), if a party or its attorney:

(A) fails to appear at a scheduling or other pretrial conference;

(B) is substantially unprepared to participate—or does not participate in good faith—in the conference; or

(C) fails to obey a scheduling or other pretrial order.

Fed.R.Civ.P. 16(f)(1). “Although a finding of bad faith is generally required for a court to impose sanctions pursuant to its inherent...