Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alsd-1_04-cv-00766/USCOURTS-alsd-1_04-cv-00766-1/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 31:3731 Fraud

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1 This motion is GRANTED except that, as explained, infra, the undersigned has

not considered any document attached to plaintiff’s supplemental submission besides the

supplemental testimony of Branson.

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

CONTINENTAL CASUALTY :

COMPANY, an Illinois

Corporation, :

Plaintiff, :

vs. CA 04-0766-KD-C

:

COMPASS BANK,

:

Defendant.

ORDER

This cause is before the Court on plaintiff’s omnibus motion for

sanctions (Doc. 158), the defendant’s response (Doc. 167), plaintiff’s reply

brief in further support of the omnibus motion (Doc. 172), defendant’s

objection to plaintiff’s motion for leave to file a reply brief in support of its

omnibus motion (Doc. 174), plaintiff’s response to defendant’s objection (Doc.

189), plaintiff’s supplemental submission in further support of its omnibus

motion for sanctions (Doc. 233), defendant’s response to plaintiff’s

supplemental submission (Doc. 239), and plaintiff’s motion for leave to file

reply brief in support of its supplemental submission (Doc. 241)1

. Having

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 1 of 54
In addition, in preparing this order the undersigned has given no consideration

whatsoever to the February 23, 2006 letter copied to the Court by defense counsel. If this letter

was intended as a “filing” in relation to the omnibus motion for sanction, it was not authorized.

Compare SD ALA LR 5.1(d) (“A request for court action should be submitted in the form of a

motion, petition or other pleading as authorized by statute or rule. Requests for court action may

not be submitted in the form of a letter.”) with SD ALA LR 5.5(a) (“Initial disclosures, expert

witness disclosures, pretrial disclosures, interrogatories, requests for production, requests for

admissions and responses thereto, and notices of depositions shall be served in accordance with

Fed.R.Civ.P. 5(b), but shall not be filed with the clerk unless otherwise ordered by the court or

for use at trial or in connection with motions.”) and SD ALA LR 5.5(c) (“If discovery materials

are germane to any motion or response, only the relevant portions of the material shall be filed

with the motion or response.”). Moreover, as reflected by the plaintiff’s motion to strike (Doc.

254), the defendant’s tardy disclosure of the documents attached to defense counsel’s letter of

February 23, 2006 is irrelevant to the pending omnibus motion for sanctions. Because the

undersigned has not considered defense counsel’s February 23, 2006 letter, plaintiff’s motion to

strike same (Doc. 254) is found to be MOOT.

2 Despite defendant’s objection to plaintiff’s motion for leave to file a reply brief in

support of its motion for sanctions (Doc. 189), the undersigned has considered plaintiff’s reply

brief (Doc. 172).

2

considered the contents of all of these pleadings,2 this order is entered pursuant

to 28 U.S.C. § 636(b)(1)(A) and Local Rule 72.2(a).

Through this omnibus motion for sanctions, plaintiff seeks serious

sanctions against Compass, including entry of judgment, striking of defenses

or other appropriate relief, based upon what plaintiff characterizes as Compass

Bank’s spoliation of evidence, violation of discovery and sanction orders, and

submission of false affidavits to the Court. (Doc. 158) 

[A]s to Compass’ spoliation of evidence, after months of

unsuccessful attempts to ascertain basic account information as

to Elaine Howe’s fraud account - including multiple motions to

compel and court orders requiring the production of such

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 2 of 54
3

information and imposing sanctions – Continental has recently

learned through the admission of a Compass employee that

Compass altered its records in late May or June 2002 to delete

“c/o Radney Funeral Home” from the account name. This

deletion came after Howe had been arrested, after Compass had

turned away SCI’s fraud investigator when he requested

information about Howe’s fraud scheme, and even after

Compass had received a subpoena from the Mobile District

Attorney’s office on May 16, 2002 for Howe’s records.

After Continental learned of this inexplicable destruction

of key evidence, its counsel attempted to question Compass’

Rule 30(b)(6) witness about this deletion, as well as other topics.

The witness, having admitted that she had looked at but a

handful of documents for one of Howe’s eight accounts at

Compass and prepared for only a couple hours, was utterly

unable to testify as to Compass’ knowledge regarding this

deletion, nor many other topics. As a matter of law, this

constitutes a failure to appear for the deposition by Compass and

calls for sanctions.

In addition to destroying evidence or failing to provide

required testimony, Compass has withheld relevant documents

and even taken the further step of providing false information in

the form of affidavits submitted to this Court. Specifically,

Compass has submitted affidavits from its personnel claiming

that account opening documents for Howe’s accounts are

unavailable, but its own employees have admitted under oath

that such documents would have been maintained in Compass’

Birmingham office since at least the time of law enforcement

subpoenas in May and September 2002. Despite repeatedly

representing and affirming to the Court that certain relevant

documents did not exist, Compass recently provided certain of

these very documents at the close of fact discovery, after all

pertinent fact depositions of Compass were taken, and after the

opportunity to question any Compass personnel about such

documents had expired (other than one fact witness and under

a Rule 30(b)(6) notice). 

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 3 of 54
4

Viewed separately or in totality, these numerous acts of

discovery abuse by Compass have effectively thwarted

Continental’s efforts to uncover the truth of this fraud scheme

and Compass’ full involvement therein, and to properly support

its summary judgment motion, oppose Compass’ similar

motions, and otherwise prepare for trial. Moreover, Compass’

conduct has violated the rules of discovery and direct orders of

this Court. As a result, Continental now seeks the strongest

sanctions available to the Court to attempt to remedy Compass’

continual and flagrant abuse of discovery and the judicial

process in this case.

(Doc. 158, at 1-3 (footnote added)) Consideration of plaintiff’s allegations

requires some factual development.

FINDINGS OF FACT

1. On February 24, 2005, plaintiff propounded its first set of

interrogatories and first request for production of documents. (Doc. 15)

Among the interrogatories propounded by plaintiff were the following:

INTERROGATORY NO. 3:

Identify (a) all other accounts (whether bank, brokerage,

trust or other) and all loans or other credit facilities relating to

the Customer(s) and/or the Insured, and all other relationships

between you and the aforementioned persons or entities; (b) all

documents that refer or relate thereto, including but not limited

to, all account cards, agreements, loans, and any other opening,

modifying, or closing documentation; and (c) each of your

employees, past or present, who had personal knowledge of the

Customer(s) or the Insured, and/or their banking or other

relationship activities, and as to each such person or entity,

describe such knowledge.

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 4 of 54
5

...

INTERROGATORY NO. 10:

Identify each of your employees, past or present, who

handled or reviewed any of the Relevant Checks by identifying

(a) each of the Relevant Checks that each such employee

handled or reviewed and (b) each employee whose initials or

markings appear on any of the checks or deposit or cashing

checks.

(Compare Doc. 26, Exhibit A, PLAINTIFF’S FIRST SET OF

INTERROGATORIES TO COMPASS BANK with Doc. 39 (plaintiff’s

motion to compel)) In addition, among the request for production of

documents were the following:

REQUEST NO. 5:

Produce all documents referring or relating in any way to

any investigation or review conducted by you or anyone else of

the matters alleged in the Complaint or your Answer, including,

but not limited to, all statements, reports, notes, and email.

...

REQUEST NO. 7:

Produce (a) the original signature card(s), (b) all branch,

operations center, and other copies of the signature card(s), (c)

computerized or electronic signature card data, and/or (d) any

microfilmed, microfiche, or scanned signature card(s) for the

Relevant Account(s).

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 5 of 54
6

REQUEST NO. 8:

Produce all account opening documentation for the

Relevant Account(s), including but not limited to (a) any

microfilmed, microfiche, or scanned account opening

documentation, (b) any corporate resolutions, articles of

incorporation, or business licenses that were obtained, (c) any

computerized data from any Chex Systems or similar inquiry,

(d) any verification of tax identification number, and (e) any

other verification or due diligence performed.

REQUEST NO. 9:

Produce all documents referring or relating to the

Relevant Account(s) in any way, including, but not limited to,

customer profile(s), agreements, correspondence, change-ofaddress forms, and any other documents reflecting any changes

to or closing(s) of the Relevant Account(s).

...

REQUEST NO. 11:

Produce copies of all monthly statements for the Relevant

Account(s).

REQUEST NO. 12:

Produce copies, front and back, along with any deposit or

cash slips of: (a) all the Relevant Check(s); and (b) all other

checks $5,000 or greater deposited to and drawn on the Relevant

Account(s) during the Relevant Period.

...

REQUEST NO. 18:

Produce all teller transaction reports or similar documents

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 6 of 54
7

identifying tellers by transaction with respect to (a) the Relevant

Checks, and (b) all withdrawals [of] $5,000 or greater on any of

the Relevant Accounts.

...

REQUEST NO. 23:

Produce all manuals, guides, materials, or other

documents (whether policy, procedural, operational, or

otherwise and including cover pages, tables of contents, indexes,

and revisions thereto) for the Relevant Period concerning or

relating in any way to:

(a) the opening and operating of deposit

accounts;

(b) the handling and/or acceptance of checks

for deposit or cashing; and

(c) the avoidance or detection of check fraud,

“Know Your Customer,” and/or Bank Secrecy

Act policies and procedures.

...

REQUEST NO. 25:

Produce all training guides, materials, or documents

(including cover pages, tables of contents, indexes, and revisions

thereto) for the Relevant Period concerning or relating in any

way to:

(a) the opening and operating of deposit

accounts; 

(b) the handling and/or acceptance of checks

for deposit or cashing; and

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 7 of 54
8

(c) the avoidance or detection of check fraud,

“Know Your Customer,” and/or Bank Secrecy

Act policies and procedures.

...

REQUEST NO. 28:

Produce all audit reports and documents for the Relevant

Period relating to:

(a) the opening and operating of deposit

accounts;

(b) the handling and/or acceptance of checks

for deposit or cashing; 

(c) the avoidance or detection of check fraud,

“Know Your Customer,” and/or Bank Secrecy

Act policies and procedures;

(d) the Relevant Account(s); and 

(e) the branches or operations units where the

Relevant Account(s) were opened and/or the

Relevant Checks were deposited or reviewed.

(Compare Doc.26, Exhibit B, PLAINTIFF’S FIRST REQUEST FOR

PRODUCTION OF DOCUMENTS with Doc. 39 (plaintiff’s motion to

compel))

2. Compass Bank filed an objection to certain of the discovery

requests on March 21, 2005, on the basis that “[s]uch production by the bank

without an order of the court requiring such production would or could expose

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 8 of 54
9

the bank to liability for violation of the bank’s responsibilities under the

Gramm-Leach-Bliley Act, 15 U.S.C. § 6801(a).” (Doc. 19) Thereafter, plaintiff

filed a motion for entry of a discovery order related to the requested documents

and defendant’s objection (Doc. 26).

3. Following the entry of a protective order sought by the

defendant, and agreed to by the plaintiff (see Doc. 29), the undersigned, on

April 6, 2005 granted the plaintiff’s motion for entry of a discovery order

(Doc. 31).

Those specific objections to the interrogatories and requests for

production of documents listed in plaintiff’s motion and more

specifically identified in Doc. 26, Exhibit C, are OVERRULED

because the Court finds that the information is relevant to the

issues raised in this action and should be produced pursuant to

the terms of the Protective Order (Doc. 29) entered on April 5,

2005.

Accordingly, Defendant, Compass Bank, shall respond

to Interrogatories Nos. 2-6 and 9-11 and Requests for

Production Nos. 3, 7-16, 18-22, and 34-36 not later than April

22, 2005.

(Id.) 

4. Plaintiff filed its first motion to compel discovery on April 27,

2005, therein seeking more comprehensive answers to interrogatories 3 and 10,

from plaintiff’s first set of interrogatories to Compass Bank, and additional

production of documents from the defendant relative to requests for production

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 9 of 54
10

5, 7, 8, 9, 11, 12, 18, 23, 25 and 28 of plaintiff’s first set of requests for

production to Compass Bank. (Doc. 39) On May 20, 2005, the undersigned

entered an order which granted in part and denied in part plaintiff’s motion to

compel. (Doc. 51)

After consideration of [all pleadings and the comments of

counsel], it is determined that sufficient evidence has not been

presented that would require an order compelling the production

of the information and documents identified in plaintiff’s

motion. The evidence was sufficient[,] however, to require

Compass to conduct a second inquiry into whether it has

disclosed a complete copy of the relevant signature cards and

other “account opening documents” and to provide plaintiff’s

counsel with a certification by the appropriate agent/agents of

Compass that describes the search efforts that were made to

discover potential evidence now alleged to be unavailable. Thus,

the motion to compel was orally GRANTED IN PART AND

DENIED IN PART on May 17, 2005.

...

Compass has responded to plaintiff’s discovery requests

by answering, in part, the interrogatories and also by producing

approximately 3,300 documents. In defense of its inability to

produce all information and/or documents requested, Compass

represents that it does not have possession, custody and control

of many of the documents and was not able to provide much of

the information sought through interrogatories 3 and 10. Clearly,

the primary reason given by Compass as to why it has not been

able to produce[] a significant portion of the information

identified in the motion to compel, and then discussed during

oral argument, is that it cannot produce that which it does not

have. These written assertions, that most of the information

requested never existed or is no longer available, were affirmed

and restated during oral argument by Mr. Walker.

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 10 of 54
11

Continental responds with the argument that these

defenses to the motion to compel are not credible and therefore,

should be rejected. In other words, the circumstances pointed to

by plaintiff show that Compass has negligently or intentionally

withheld discoverable information and/or documents. As stated

during oral argument, it is the opinion of the undersigned that

the present evidence does not support such an inference and the

order requested should not be entered without additional proof

of misconduct.

Although the Court does not believe that the information

submitted by plaintiff, either in writing or presented during oral

argument, is sufficient to require the entry of a “prophylactic

order” requiring the production of information to which

Compass forcefully denies having access, it is sufficient to

require a follow-up production of information by Compass. For

these reasons, the motion to compel, is denied without

prejudice to being renewed once plaintiff reviews the

information ordered produced herein and has the

opportunity to conduct more discovery.

In keeping with this decision, Compass shall produce the

following additional information with regard to the current

discovery requests not later than May 25, 2005, a date suggested

by its attorney. First, Compass has agreed to take a second look

at its production of signature card information. The specific

question is whether the entirety of information was copied from

the cards and produced to plaintiff’s counsel. If the disclosure as

to the signature cards and other account-opening documents was

incomplete, Compass is to supplement its disclosure not later

than May 25, 2005.

Secondly, when discussing the problem of illegible

checks and deposit slips, Mr. Walker offered, and counsel for

plaintiff accepted, the invitation to allow Mr. Jordan immediate

access to the information in his possession in an attempt to

resolve the problem of illegible copies. If this inspection by Mr.

Jordan does not correct the problem, plaintiff’s counsel shall be

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 11 of 54
3 “If documents are unavailable because they have been destroyed, Compass shall

state the date of destruction, the method of destruction and the specific reasons the documents

were destroyed. This applies to electronic documents as well as paper documents.” (Doc. 51, at 7

n.3)

12

given access to the microfiche film from which the produced

documents were copied.

Turning to all information and/or documents that fall into

the broad category of being unavailable for the reasons

articulated by Mr. Walker, Compass shall provide a certification

that the information is unavailable. The certification shall

contain specific reasons as to why certain information or

documents were not kept in its normal course of business and

further, if documents were kept, the extent of the search for

those documents and the attendant reasons as to why they were

not found or are no longer available.3

 This certification is to be

prepared for plaintiff’s review not later than May 25, 2005.

Subsequent to May 25, 2005, plaintiff should, within a

reasonable time, resume its deposition schedule, and if, after the

conclusion of the depositions of those agents of Compass who

would have specific knowledge of the records kept by Compass

as well as its policies and procedures with regard to each

category of records, it may ask the Court to revisit the

argument that Compass has improperly destroyed or

withheld discoverable documents and/or information. If

plaintiff does renew its motion to compel within the

discovery period, a second review will be made after

affording Compass an opportunity to respond to any new

evidence or arguments presented by Continental.

Conclusion

For those reasons articulated during the lengthy hearing

held on May 17, 2005, plaintiff’s motion to compel Compass to

supplement its interrogatory answers and produce additional

documents is DENIED IN PART. Other than for the information

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 12 of 54
4 Matthews’ affidavit reads, in relevant part, as follows:

13

ordered produced herein, Compass is not compelled to provide

additional responses at the present time. This partial denial of

the motion to compel is without prejudice to plaintiff seeking

the same or similar relief once it has received and reviewed

a certification to be provided by Compass no later than May

25, 2005, so long as the request for a second review of issues

raised in this motion to compel is accompanied by additional

evidence and is filed within the discovery period.

(Id. at 1-2 & 5-8 (footnote in original; emphasis supplied))

5. Defendant’s response to the foregoing order reads, in relevant

part, as follows:

B. Account opening documents. Defendant has no

documents associated with the opening of any of the Howe

accounts other than copies of certain signature cards that were

produced well before the motion to compel was filed, along with

a signature card for one of the two recently identified accounts.

Account opening documents are not generally retained once the

information therein has been keyed into the bank’s C-Net

computer system, in which such information is retained. (See

affidavits of Cassaundra Franklin and Nina Wilkinson, attached

hereto as Exhibits C and D). Since the retention schedule calls

for retention of new account start-up forms for only 24 months,

and since Ms. Howe’s most recent account opening was almost

five years ago, there would be no reason to expect to find

existing copies of any such documents. 

...

2. Requests for Production.

A. Investigation. The affidavits of Erica Matthews4

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 13 of 54
I am employed by Compass Bank as a Research Manager. In that capacity, I am

familiar with the practices and procedures followed by the Subpoena Department

at Compass Bank. . . . [T]he information provided in this affidavit is based upon

my own personal knowledge or from information that I developed from my

research of bank documents.

In response to a request from Compass Bank’s Legal Department, I

searched the subpoena log books from January 2000 to the present in an effort to

locate subpoenas that were served regarding Elaine Howe’s account. I located two

subpoenas, one served on May 16, 2002 and the other served on September 19,

2002. Copies of those subpoenas and their accompanying subpoena logs are

attached hereto as Exhibits A and B respectively. I also located a separate

subpoena log referencing Elaine Howe, a copy of which is attached hereto as

Exhibit C. These are all of the documents that I was able to locate in the

Subpoena Department records with regard to Elaine Howe. 

I also sought records maintained in the record retention department, and I

located a file that contained an e-mail transmission from David Whitehurst

regarding the subpoena. A copy of that e-mail is attached hereto as Exhibit D. I

am awaiting a response from my effort to access records from the Compass Bank

warehouse area; if there are additional records or documents there that relate in

any way to either of these subpoenas, I will supplement this affidavit to describe

them.

After receiving a subpoena, the Subpoena Department first verifies that a

subpoena is a valid subpoena, then the subpoena is reviewed to determine what

information is being requested. If a subpoena requests a large volume of

information that may be costly or overly time consuming to produce, the practice

in the department is to contact the issuing agent in an effort to reduce the overall

request and to also confirm with the agent that all the information is needed.

Generally, there are no documents maintained by the Subpoena Department in

response to a subpoena other than the subpoena log and the subpoena itself.

I am also familiar with the retention policies and practices for check and

deposit slip items maintained by Compass Bank on microfilm. The bank has a

seven year record retention schedule for such documents. After seven years, the

microfilm containing copies of such documents are boxed up and are picked up

by the bank’s record retention vendor, a company named Iron Mountain, which is

then responsible for destroying the microfilm. I do not know precisely how the

microfilm is destroyed.

14

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 14 of 54
(See, e.g., Doc. 58, Affidavit of Erica Matthews) 

15

and David Whitehurst, which are attached hereto as Exhibits E

and G, detail the handling at Compass Bank of the subpoenas

issued in 2002 by the State of Alabama for Elaine Howe’s

records, and such affidavits have attached to them copies of the

bank’s file materials from the Research Department and the

Corporate Security Department that relate to such subpoenas.

All such documents were generated after the cessation of the

check fraud scheme, and none of the documents appear to have

any relevance to plaintiff’s claims in this case. 

B. Signature cards and related documents. The

available signature cards have been produced, and the reasons

for lack of any other information are detailed in the affidavits of

Cassaundra Franklin and Nina Wilkinson.

C. Account opening documentation. No account

opening documentation is presently available with regard to

Elaine Howe’s accounts, which were opened between five and

seventeen years ago, for the reasons set forth in the affidavit of

Cassaundra Franklin. Whether any such documentation was

ever completed in connection with the opening of any of

Howe’s accounts is unknown.

D. Customer profile documents. Compass produced

all of its customer profile information on Elaine Howe prior to

the filing of the motion to compel. As noted in the affidavit of

Cassaundra Franklin, the customer information in the bank’s CNet computer system is keyed in to the system by branch

personnel who obtain the information from the customer.

...

 3. Specific questions of the court.

A. Was the entirety of the information on Howe’s

signature cards produced to plaintiff? Yes. See affidavit of

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 15 of 54
16

Nina Wilkinson.

B. Why are some documents sought by plaintiff no

longer available? See affidavits of Cassaundra Franklin (Exhibit

C), Nina Wilkinson (Exhibit D), Erica Matthews (Exhibit E),

John W. McNichol, Jr. (Exhibit F), and Seavey Webb (Exhibit

H).

(Doc. 53, at 2, 4 & 7)

6. On June 17, 2005, plaintiff filed a motion to enforce the

discovery order entered by the undersigned on May 20, 2005 and for sanctions

(Doc. 67), primarily on the basis that defendant had failed to specify the

method, and perhaps the date, of destruction of teller tapes, checks and deposit

slips, account opening documents, monthly statements, and customer profile

information (id. at 3-7). In addition, plaintiff contended that the defendant’s

affidavits failed to establish certification by the most knowledgeable agent.

(Doc. 67, at 7-10) Following consideration of this motion, as well as the

defendant’s response (Doc. 75), the Court entered an order on July 27, 2005

granting in part and denying in part plaintiff’s motion (Doc. 97).

[T]he Court finds nothing in its order of May 20, 2005 which

requires certification by Compass Bank’s most knowledgeable

agent and, therefore, the Court has no basis upon which to

sanction Compass in this regard. In addition, the order does not

impose upon Compass the duty to poll all of its current

employees regarding teller numbers and because plaintiff’s

counsel does not support his recollection that the Court gave

such direction to Compass Bank, the undersigned cannot

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 16 of 54
5 “Counsel for Compass Bank has informed the Court that it polled all former

tellers it still employs regarding teller numbers and has supplied this information to Continental.

Defendant, therefore, has been relatively forthcoming in this regard. Certainly, its conduct is not

sanctionable.” (Doc. 97, at 5 n.1)

17

sanction Compass in this regard.5

This Court also cannot sanction Compass Bank for its

failure to respond to plaintiff’s counsel’s request for further

information regarding whether information regarding customer

profiles, which is stored electronically on its “C-Net” system, is

archived in its “Mobius” system. While it certainly would have

been more cooperative of Compass to provide such information

to Continental, the plaintiff simply has not identified any portion

of the Court’s May 20, 2005 order transgressed by Compass

Bank’s refusal to provide such information; therefore, Compass

Bank cannot be sanctioned in this regard either.

What is left of Continental’s arguments are the four

regarding the defendant’s failure to certify the date and method

of destruction of relevant documents (teller tapes, check and

deposit slips, and account opening documents) it destroyed or

the specific reasons for such destruction (i.e., specifically, with

respect to monthly statements). Compass responds that the teller

tapes were destroyed by an independent contractor and,

therefore, it could not “provide any certification as to the

manner of their destruction.” The defendant contends that its

failure to certify the manner of destruction of the teller tapes,

and, therefore, the dates thereof, is basically harmless since it

provided plaintiff with all the deposit slips relating to Elaine

Howe’s transactions and such slips contain the same information

which could have been recorded on the teller tapes. Whether

harmless, or not, by making such argument Compass is

admitting that it did not follow the explicit dictates of this

Court’s May 20, 2005 order. Again, the Court stated that if

documents are unavailable because they have been destroyed,

“Compass shall state the date of destruction, the method of

destruction and the specific reasons the documents were

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 17 of 54
18

destroyed.” The use of the word shall leaves no wiggle room for

Compass in this regard and certainly does not contemplate that

defendant could blame its inability to provide the dates and

manner of destruction of documents on the fact that it paid an

independent contractor to destroy the documents in question. As

pointed out by Continental, to determine the date and manner of

destruction of any particular group of documents, such as teller

tapes, all Compass need do is reference correspondence with its

independent contractor, Iron Mountain. Even if determining

such information is not as easy as outlined, it matters not

because the order specifically dictates that Compass is to

provide such information to Continental. Defendant’s failure to

provide to Continental the date and manner of destruction of the

teller tapes must result, not only, in Compass being again

ordered to produce such information to Continental on or before

the close of business on August 10, 2005, but also that the

defendant be sanctioned for its failure to follow the Court’s

specific instructions contained in its May 20, 2005 order. . . .

Defendant makes a similar harmless error argument

regarding the microfilmed checks and deposit slips about which

it admits that it did not provide plaintiff with the method(s) of

destruction and dates of destruction. (Doc. 75, at 3-4) According

to Compass, plaintiff has received from its insured copies of all

of the subject checks and that it produced most of the deposit

[s]lips for checks deposited after August of 1997 and since a sixyear statute of limitations applies to plaintiff’s claims “it is hard

to conceive how deposit slips dated prior to November 1998

could possibly be relevant to this case.” (Id.) Again, it really

matters not what plaintiff has or has not received in terms of

relevant documents. What matters is Compass Bank’s failure to

follow this Court’s order and inform Continental of the

method(s) of destruction of the microfilmed checks and deposit

slips and the dates of destruction of same, information which it

easily could have procured from its independent contractor.

Compass is ORDERED to inform Continental of the method(s)

of destruction of the microfilmed checks and deposit slips and

the dates of destruction on or before August 10, 2005.

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 18 of 54
6 This order also contains the following footnote: “During oral argument on June

28, 2005, plaintiff’s counsel argued extensively that McNichols’ affidavit attempt to answer

interrogatory 10 was undermined by his deposition testimony and counsel also argued that

plaintiff had evidence that the defendant had a ‘Know Your Customer Rule’ contrary to the

position taken by defendant. The undersigned does not consider the import of such oral

arguments, however, because they relate to the original motion to compel and not to Compass

Bank’s failure to obey the undersigned’s May 20, 2005 Order. As the Court clearly instructed the

plaintiff, with respect to such issues plaintiff is required to renew its motion to compel within the

discovery period and support same with additional evidence. (Doc. 51, at 8)” (Doc. 97, at 10 n.4)

19

As to the account opening documents, Compass is

ORDERED to inform plaintiff, to the best of its knowledge,

whether these documents [we]re destroyed pursuant to the same

procedure [] outlined in Seavey Webb’s affidavit. (Compare

Doc. 67, at 6 with Doc. 75, at 4) This information is to be

supplied to Continental on or before August 10, 2005.

Finally, with respect to the monthly statements

electronically stored on defendant’s “Mobius” archiving system,

Compass argues that “it appears that plaintiff is seeking

sanctions for what it characterizes as defendant’s insufficient

explanation for destruction of documents that are not relevant to

its claims in this case.” (Doc. 75, at 5) The defendant’s

argument that these documents have a “tenuous” or “no”

relationship to this case is of no moment since it was ordered to

provide plaintiff with specific information regarding destroyed

documents, including the reasons the documents were destroyed.

Accordingly, on or before August 10, 2005, Compass is to

outline for Continental all reasons for the destruction of the

monthly statements if other reasons for destruction exist beyond

the programming of the “Mobius” system to delete such

documents from the system after seven years.

(Id. at 5-7 & 8-10 (footnote and emphasis in original))6

 

7. On August 10, 2005, Compass Bank filed the following response

to the foregoing order of July 29, 2005:

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 19 of 54
20

1. Defendant on April 5, 2005, produced its Policy

& Procedures for the Records Retention Compliance and

Control Program, designated as COM02884-COM02904, and

attached hereto as Exhibit A. As reflected in COM02890, the

established Records Destruction Procedures followed by

Compass Bank presently consist of the following steps for

destruction of routine records:

a. Quarterly, a Purged Notification Report

will be generated and given to the Procurement

Department. This report will be distributed to the

Division Finance Managers for review.

b. This report will be reviewed and the

Division Finance Manager is required to submit

an approval e-mail (within two weeks) to the

Expense Management Department that the

destruction of the identified boxes is approved.

c. All eligible records will be systematically

destroyed under appropriate procedures.

Defendant is also producing herewith as Exhibit B the July 14,

1997 version of its policies and procedures for the records

retention compliance and control program, designated

COM03071 through COM03087. These reflect that there has

been little change in such destruction and retention procedures

over the past eight years.

2. Teller tapes. These are subject to the same

records destruction policy described above. Page 14 of the

Policies and Procedures for the Records Retention Compliance

and Control Program (COM02897) requires that “Teller Work”

be retained for one year. The affidavit of Seavey Webb, attached

hereto as Exhibit C, details the reason why and the process by

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 20 of 54
7 Webb’s affidavit reads, in relevant part, as follows: 

I am presently employed by Compass Bank as Operations Manager in its Cash

Balancing Department. . . .

At the request of a representative of Compass Bank’s Legal Department, I

have investigated to determine the date of destruction, the method of destruction,

and the specific reasons for the destruction of teller tapes and account opening

documents that have been generated in Compass Bank branches and that have

thereafter been retained by the bank here in Birmingham. Such documents are

destroyed, when it is time for them to be destroyed, at the Iron Mountain facility

that Compass Bank has retained to destroy documents that are no longer required

to be maintained or retained.

With regard to both teller tapes and account opening documents, I have

determined that the reason for the destruction of all documents in either category

is to comply with the record retention schedule adopted by the bank. Similarly, I

have determined that the method of destruction of such documents utilized at the

Iron Mountain facility was formerly an acid bath, after which the remnants of the

destroyed documents were recycled for use in toilet paper production; more

recently, the procedure has been changed and the documents are now crossshredded. I have been unable to ascertain the precise date on which the change

was made.

To determine the dates of destruction of the teller tapes, I requested a list

from the Iron Mountain facility identifying the destroyed boxes of teller tapes and

the dates on which they were destroyed. I have attached hereto as Exhibit A a list

identifying the boxes of teller tapes from Mobile branches that have been

destroyed. I later received a second list that is attached hereto as Exhibit B, which

identifies the dates of destruction of the various teller tape boxes.

I was also asked to determine the method of destruction of microfilm and

microfiche at the Iron Mountain facility, and I conducted a similar inquiry in this

regard. I was advised by Iron Mountain personnel that Compass Bank microfilm

and microfiche are destroyed there in a shredder.

(Doc. 102, Affidavit of Seavey Webb)

21

which the teller tapes were destroyed[.]7 . . . Mr. Webb’s

affidavit is accompanied by two exhibits that identify the teller

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 21 of 54
8 McDonald’s affidavit reads, in relevant part, as follows:

I am presently employed by Compass Bank as a Senior Vice President. . . .

I was asked by a representative of Compass Bank’s Legal Department to

ascertain how and when copies of checks and deposit slips for Compass Bank

account number 36535989 for the periods of time prior to February of 1998 were

destroyed, as well as to ascertain how and when copies of account statements for

that account for periods prior to August of 1997 were destroyed.

The checks and deposit slips are to be destroyed at the Iron Mountain

facility by shredding after the microfilmed copies had been retained for the period

required in the Record Retention policy, which required retention of such

microfilm for seven years. I learned that in practice such microfilm is retained

until December of the year in which the seven year deadline passes, and then all

microfilm that reached the seven year mark in such year is destroyed in one

operation. Because a hold was placed on such records after the lawsuit was filed,

the bank now has microfilm reflecting checks and deposit slips from 1996 and

1997. Microfilm copies of checks and deposit slips for 1995 would have been

destroyed by shredding in December of 2002.

Account statements have been maintained on the Mobius system since

July of 1997, but they are electronically deleted from that system on the seventh

year anniversary date for each such statement. Thus, for example, on August 1,

2005, the bank statements retained on the Mobius system for July 1998 would

have been electronically deleted automatically. Prior to their retention on Mobius,

such statements were maintained on microfiche, and were subject to the same

22

tapes from the Mobile branches that were destroyed and the

dates on which they were destroyed, as required by the Court’s

recent order. 

3. Checks and deposit slips. These are subject to the

records destruction policy described above. Page 13 of the

record retention policy (COM02896) requires that DDA and

savings research fiche and film be retained for seven years. Mr.

Webb’s affidavit establishes that the method of destruction for

microfilm or microfiche records at Iron Mountain is and was

shredding. The attached affidavit of Betty McDonald explains

her research relative to such microfilm.8

 . . . 

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 22 of 54
destruction policies and procedures that are described above with regard to checks

and deposit slips. I have located microfiche copies of account statements for the

period from January 23, 1997, through July 17, 1997. Microfiche of checks and

account statements for 1996 would have been destroyed by shredding in

December of 2003 and without this microfiche we would not be able to locate any

information on the 1996 microfilm. Microfiche of account statements for 1995

would have been destroyed by shredding in December of 2002.

(Doc. 102, Affidavit of Betty McDonald)

23

4. Account opening documents. Such documents are

subject to the same record destruction policy as is described

above. Page 13 of the record retention policy requires that new

account set up forms be retained for two years. Mr. Webb’s

affidavit establishes that the reason for the destruction of

account opening documents, and the methods by which they

have been destroyed, are the same as the reason and the methods

for the destruction of teller tapes described in paragraph 2,

above.

5. Account statements. These are subject to the same

destruction policy identified above with regard to checks and

deposit slips, and are required to be retained for the same seven

year period. During the period of time before the Mobius system

was used for the retention of past account statements, they were

retained on microfiche and were subject to the same destruction

practices and methods as are and were used for check and

deposit slip film and fiche described in paragraph 3, above. . . .

(Doc. 102, at 1-4)

8. On September 12, 2005, plaintiff filed what it described as its

second motion to compel, therein seeking the production of personnel files it

claimed were responsive to Requests for Production numbers 21and 25 from

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 23 of 54
9 The revised notice simply stated a different time for the deposition. (Doc. 158,

Deposition of Sharon Branson, at 96)

24

its first set of requests for production of documents. (Doc. 120; see also Doc.

125 (corrected motion)) While the first motion to compel filed by Continental

did relate, in part, to request for production number 25, citation to this request

for production in Continental’s first motion was never made in relation to the

seeking of personnel files. This motion to compel was denied by the

undersigned by order dated November 9, 2005. (Doc. 182)

Document Request No. 25 simply cannot be read as requesting

personnel files and reading it in that manner would lead to a

much more expansive reading of this request for production than

is contemplated by Rule 34(b) of the Federal Rules of Civil

Procedure. . . . The plaintiff, of course, desires such an

expansive reading of Document Request No. 25 because that is

the only conceivable basis for it to be able to get the personnel

files of Jennifer Gaston and all other Crichton branch

employees. . . . However, the undersigned declines to read

Request for Production No. 25 as plaintiff desires, and,

therefore, DENIES plaintiff’s second motion to compel to the

extent it seeks the “entire” personnel files of Jennifer Gaston

and all other Crichton branch employees.

(Doc. 182, at 7-8 (emphasis in original; footnote omitted))

9. On September 27, 2005, Continental served upon counsel for

Compass a revised notice of deposition relating to the 30(b)(6) depositions of

the bank’s corporate designees to be taken on September 29 and 30, 2005.

(Doc. 158, REVISED NOTICE OF DEPOSITION)9

 Compass, in fact,

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 24 of 54
25

produced four witness in response to Continental’s notice, as revised. (Doc.

167, at 14) The parties are in agreement that Compass produced Sharon

Branson as its corporate designee on the following eight discrete topics, as

well as others (compare Doc. 158, at 18 with Doc. 167, at 14):

9. The opening, maintenance, and closing of the

Relevant Account(s), as defined above, and all related

documentation.

11. All overdrafts, cashiers’ checks, wire transfers,

telephone transfers, and transactions above $2,500 involving the

Relevant Account(s) during the Relevant Period.

12. Compass’ knowledge of the Customer(s) and the

Insured, including but not limited to Radney Funeral Home,

both as defined above.

13. Any investigation conducted relating to the check

fraud scheme as described in the Complaint and the Revised

First Amended Complaint.

14. Any subsequent remedial measures taken by

Compass, including any changes in policies or procedures,

following discovery of Howe’s check fraud scheme.

15. Compass’ filing of any suspicious activity report

related to the subject matter of the action, and communications

with any law enforcement or regulatory authority concerning the

subject matter of this action.

16. (a) All records and information concerning (i) the

opening and/or handling of deposit accounts or (ii) the

acceptance and/or handling of checks, deposits or other items of

the following employees: Jennifer Taylor, Jeanette Taylor, Pam

Jackson, Ollie Green, Tracy Alexander, Celeste Barlow, Natasha

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 25 of 54
26

Barnhill, Barbara Basinger, Sharon Cunningham, Dorothy

Dinkins, Valerie Dow, Sarah Edwards, Regina Franklin,

Jennifer Gaston, Shelia Gordon, Karron Griffin, Jeanna Marie

Kenny, Andrea Longcrier, Mary Martin, Amelia Mass, Michael

McMullen, Salena McKinnis, Catherine McPherson, Tina

Moody, John Naughton, Martena Nies, Daniel Owen, John

Patton, Jessica Phillips, Tabitha Pugh, Betty Reynolds, Ivy

Savage, Ronald Scott, Helen Sylvester, Rhonda Turner, Lebreon

Washington, Lawandra Williams, Terri Williams, Vivian

Windsor, and any other employee who during the Relevant

Period worked at the Crighton branch or opened or performed

any transaction with the Relevant Accounts or Relevant Checks.

(b) All records and information concerning any

criticism, incidents, losses or adverse employment action for any

of the above employees, including while at another branch.

19. Compass’ retention and destruction of all

documents requested in Plaintiff’s Request for the Production of

Documents and all documents identified in Compass’ answers

to Plaintiff’s Interrogatories.

(Doc. 158, REVISED NOTICE OF DEPOSITION, at 4, 5 & 6) 

10. Presently before this Court for consideration is Continental’s

omnibus motion to the district court for sanctions entering judgment against

Compass Bank, striking of defenses or other appropriate relief arising from

spoliation of evidence, violation of discovery and sanctions orders and

submission of false affidavits filed on October 18, 2005 (Doc. 158). This

motion reads, in part, as follows:

[A]s to Compass’ spoliation of evidence, after months of

unsuccessful attempts to ascertain basic account information as

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 26 of 54
27

to Elaine Howe’s fraud account - including multiple motions to

compel and court orders requiring the production of such

information and imposing sanctions – Continental has recently

learned through the admission of a Compass employee that

Compass altered its records in late May or June 2002 to delete

“c/o Radney Funeral Home” from the account name. This

deletion came after Howe had been arrested, after Compass had

turned away SCI’s fraud investigator when he requested

information about Howe’s fraud scheme, and even after

Compass had received a subpoena from the Mobile District

Attorney’s office on May 16, 2002 for Howe’s records.

After Continental learned of this inexplicable destruction

of key evidence, its counsel attempted to question Compass’

Rule 30(b)(6) witness about this deletion, as well as other topics.

The witness, having admitted that she had looked at but a

handful of documents for one of Howe’s eight accounts at

Compass and prepared for only a couple hours, was utterly

unable to testify as to Compass’ knowledge regarding this

deletion, nor many other topics. As a matter of law, this

constitutes a failure to appear for the deposition by Compass and

calls for sanctions.

In addition to destroying evidence or failing to provide

required testimony, Compass has withheld relevant documents

and even taken the further step of providing false information in

the form of affidavits submitted to this Court. Specifically,

Compass has submitted affidavits from its personnel claiming

that account opening documents for Howe’s accounts are

unavailable, but its own employees have admitted under oath

that such documents would have been maintained in Compass’

Birmingham office since at least the time of law enforcement

subpoenas in May and September 2002. Despite repeatedly

representing and affirming to the Court that certain relevant

documents did not exist, Compass recently provided certain of

these very documents at the close of fact discovery, after all

pertinent fact depositions of Compass were taken, and after the

opportunity to question any Compass personnel about such

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 27 of 54
28

documents had expired (other than one fact witness and under

a Rule 30(b)(6) notice). 

Viewed separately or in totality, these numerous acts of

discovery abuse by Compass have effectively thwarted

Continental’s efforts to uncover the truth of this fraud scheme

and Compass’ full involvement therein, and to properly support

its summary judgment motion, oppose Compass’ similar

motions, and otherwise prepare for trial. Moreover, Compass’

conduct has violated the rules of discovery and direct orders of

this Court. As a result, Continental now seeks the strongest

sanctions available to the Court to attempt to remedy Compass’

continual and flagrant abuse of discovery and the judicial

process in this case.

...

The signature card for Howe’s fraud account was

incomplete (no. 36535989, COM00371, Ex. A) and account

opening documentation was missing, conveniently preventing

disclosure of basic identifying information, including Social

Security number, identification provided, address, phone

number, and employer (then Radney Funeral Home and SCI),

normally obtained by Compass on account opening. Apr. 27,

2005 Motion to Compel, at 11-13 (Request No. 7). Compass

also failed to produce opening documentation for all known

accounts (nos. 36535989, 38174754, 78752882, 80612176,

81446857 and 11945427), which later totaled eight. Compass’

procedures specifically required the collection of information in

a Customer Account Information Form, Ex. U, COM03051 (rev.

Nov. 1994), yet such completed forms and/or corresponding

electronic information were never produced or fully provided to

Continental.

While Compass had for months denied the existence of

“customer profile” documents, plaintiff finally received nine

incomplete profile pages printed as of April 20, 2005 which

showed the name of Howe’s fraud account (no. 36535989) was

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 28 of 54
29

Elaine H. Howe, without any inclusion of “c/o Radney Funeral

Home” in the name. Ex. C, COM03287-95. The profiles showed

that Howe was employed by Radney, the drawer of the checks,

but otherwise the profiles were missing Howe’s telephone

number, address, job title, among other fields that are blank, and

contained several blank pages for “Customer Commercial

Information” for Howe’s accounts that could only relate to a

business account (Ex. C, at COM03290-92). Profile information

would have existed in electronic form at various points in time

and well before the post-complaint April 20, 2005 print-out if

the remaining information had not been purged from Compass’

computer system. Apr. 27, 2005 Motion to Compel, at 14-15

(Request No. 9).

Compass further failed to produce necessary account

modification documentation that reflected (a) the closing of

Howe’s accounts, and (b) address or other changes, which

occurred several times on the eight accounts. Apr. 27, 2005

Motion to Compel, at 14-15 (Request No. 9).

Compass also failed to produce the initial monthly

statements for [] Howe’s fraud account no. 36535989 for the

period July 10, 1995, through August 8, 1997. Apr. 27, 2005

Motion to Compel, at 15 (Request No. 11). Compass also failed

to produce relevant fraud checks and deposit slips for the period

1996-1997. Id. at 16 (Request No. 12).

(Doc. 158, at 1-3 & 4-5) 

11. On December 5, 2005, this Court entered an order which denied

plaintiff’s motion for sanctions for defense counsel’s misconduct at various

depositions but found that defense counsel had improperly cut short the

deposition of Sharon Branson by one hour and ten minutes. (Doc. 192)

Accordingly, the Court extended to plaintiff the opportunity to depose Branson

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 29 of 54
30

by telephone for an additional one hour and ten minutes. (Id.) 

Allowing plaintiff to take a one hour and ten minute

supplemental telephonic deposition of Branson also answers

plaintiff’s concern over defense counsel insisting on a lunch

break during what plaintiff has termed a “critical line of

examination regarding the Bank’s spoliation of electronic

records[,]” (Doc. 153, at 7), particularly since plaintiff has

presented to this Court a different motion for sanctions

regarding the Bank’s alleged spoliation of electronic records

(Doc. 173, at 3 (“Specifically, counsel broke up a critical line of

examination regarding Compass’ spoliation of electronic

records, which has since become the subject of Continental’s

contemporaneous motion for sanctions against Compass.”)).

Should plaintiff obtain from Branson any helpful

information regarding the alleged spoliation of electronic

records, the Court hereby grants Continental leave to amend

its motion for sanctions (Doc. 158) with such testimony.

(Doc. 192, at 7-8 (emphasis supplied)) Though the contents of the foregoing

order appear to be very pointed, Continental chose to read same broadly to file

a longer brief than it filed in the first instance (compare Doc. 233 with Doc.

158) and to focus same not upon Compass’ alleged spoliation of electronic

documents (see Doc. 233, at 27-33) but, instead upon Branson’s alleged failure

to appear for her 30(b)(6) deposition (id. at 2-26). To the extent plaintiff

attached anything to its supplemental submission beyond the supplemental

testimony of Branson, such evidence is STRUCK and is not considered by the

undersigned in relation to the omnibus motion for sanctions.

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 30 of 54
31

CONCLUSIONS OF LAW

A. Spoliation.

1. It is plaintiff’s contention that Alabama substantive law applies

to its allegation of spoliation of evidence by Compass Bank. (Doc. 158, at 8-

14; see also Doc. 172, at 2-5; Doc. 189, at 2-6) Plaintiff is completely wrong

in this regard, as the Eleventh Circuit, just days before plaintiff filed its

omnibus sanctions motion (Doc. 158, filed October 18, 2005), addressed

whether to apply state law or federal law to the issue of spoliation sanctions

and specifically determined that “federal law governs the imposition of

spoliation sanctions[] . . . because spoliation sanctions constitute an

evidentiary matter.” Flury v. Daimler Chrysler Corp., 427 F.3d 939, 944 (11th

Cir. October 5, 2005) (citations omitted). Though the Eleventh Circuit found

federal law controlling and noted that “[d]ismissal represents the most severe

sanction available to a federal court,” id., it also recognized that federal courts

may necessarily need to examine state factors to the extent they are “wholly

consistent with federal spoliation principles.” Id. 

2. Interestingly, even though plaintiff’s primary authority for filing

its motion for sanctions is grounded upon Rule 37 of the Federal Rules of Civil

Procedure (Doc. 158, at 1 (“Plaintiff . . . pursuant to Rule 37, hereby moves

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 31 of 54
32

the District Court for sanctions including, inter alia, entering judgment against

Defendant, Compass Bank [], striking Compass’ defenses, or other appropriate

relief, arising from Compass’ spoliation of evidence, violation of discovery

and sanction orders, and submission of false affidavits to the Court.”)), it

quickly shuns the rule upon determining that it, in its own words, is contrary

to Alabama law which recognizes that “[d]ismissal for failure to comply with

a request for production may be warranted even when there was no discovery

pending or even litigation underway at the time the evidence in question was

discarded or destroyed.” Vesta Fire Ins. Corp. v. Milam & Co. Constr., Inc.,

901 So.2d 84, 93 (Ala. 2004) (citation omitted). (Doc. 158, at 8) This Court,

however, is not persuaded by plaintiff’s argument and does not accept as

controlling this proposition of Alabama law since, as plaintiff admits, it is

contrary to Rule 37 of the Federal Rules of Civil Procedure. It is obvious to the

undersigned that the Eleventh Circuit would not determine this proposition of

Alabama consistent with federal spoliation principles. 

3. Because plaintiff relies only on Alabama cases which deal with

evidence destroyed prior to litigation, on the admitted allegation that Compass

Bank altered (or destroyed) evidence prior to the institution of this case in

2004 (see, e.g., Doc. 158, at 10 & 11 (“On September 28, 2005, after the close

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 32 of 54
33

of fact discovery . . . Jennifer Taylor Decker, the Compass employee who

Compass now claims opened the acknowledged fraud account, confirmed as

other Compass witnesses have been forced to admit, that the name of the

account, as reflected on the account statements prior to June 2002 was clearly

‘ELAINE H. HOWE C/O RADNEY FUNERAL HOME.’ . . . Ms. Decker

testified that after May 9, 2002, the account name was altered to delete

‘c/o Radney Funeral Home,’ as the last account statement for the period

May 10, 2002 through June 10, 2002 demonstrates. . . . Compass altered its

records after discovery of Howe’s fraud scheme and after SCI’s security

investigator had visited Compass Bank in or around late March 2002,

regarding Howe’s scheme . . . and even after Compass Bank had been served

with a subpoena by the Mobile District Attorney’s Office on May 16, 2002 for

Howe’s records.” ) (some emphasis supplied; other emphasis in original)), and

there has been no showing by plaintiff that federal spoliation law is akin to

Alabama law such that dismissal, or some other sanction, is warranted where

a party destroys (or alters) evidence prior to litigation, the undersigned

declines plaintiff’s invitation to sanction defendant for actions it took prior to

the filing of the instant law suit by Continental. Continental has supplied this

Court with no evidence that Compass altered its records after the filing of the

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 33 of 54
10 The undersigned cannot perceive how any lesser sanction will harm Compass’

position in this case any more than the testimony of its own witnesses, if such testimony is as

harmful to Compass as Continental would suggest. Continental can argue the testimony of

Compass’ witnesses for all its worth; however, since any alleged alteration on the fraud account

came about before Continental filed its law suit against Compass there is no basis under federal

law to sanction Compass, by dismissal or the striking of defenses, for such action or

happenstance. Of course, Continental need be wary where it would trod given the defendant’s

credible software change explanation to account for what plaintiff has described as Compass’

spoliation of evidence. (See Doc. 239, Exhibit C, Affidavit of Don Miley, at 2 (“Compass Bank

installed [] Pitney-Bowes software and began to run its deposit accounts through the software for

the first time in May of 2002. As a result of beginning to run this software in May of 2002,

changes were made without any human intervention on many deposit accounts, including

Account No. 36535989. The software made two changes with respect to Account No. 36535989

in May of 2002. First, it changed the zip code from a five-digit zip code to a nine-digit zip code.

Second, it changed the ‘c/o Radney Funeral Home’ from a name line to an address line. As

a result, statements sent after that date showed the name on this account as ‘Elaine J.

Howe’ and the ‘c/o Radney Funeral Home’ line printed on the statement with the

address.”))

34

lawsuit; therefore, this Court finds no basis upon which to find that Compass

acted in bad faith and, consequently, no basis to sanction Compass, by

dismissal, for its alleged spoilation of evidence or for granting plaintiff any

lesser sanction. Cf. Flury, supra, 427 F.3d at 944-945 (“Dismissal . . . should

only be exercised where there is a showing of bad faith and where lesser

sanctions will not suffice. . . . No lesser sanction will suffice in this case. The

record reveals that plaintiff knew the location and condition of the subject

vehicle for a considerable amount of time following the accident. Moreover,

plaintiff was fully aware that defendant wished to examine the vehicle.”).10

B. Compass’ Alleged Submission of False and Misleading

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 34 of 54
35

Affidavits and Withholding of Related Documents.

4. Continental’s argument in this regard boils down to the

following five paragraphs, or portions thereof, contained in its motion:

Compass had copies of these records [i.e, monthly statements

and checks and deposit slips] in its Research Department that

Compass only recently produced and made available.

Specifically, Ms. Matthews, Compass’ Research Department

manager and corporate designee on Compass’ communications

with law enforcement testified on the last day of discovery that

the Research Department possessed three files consisting of

copies of documents that were produced in response to May and

September 2002 subpoenas for Howe’s records. These

documents produced in response to subpoena were subject to a

seven-year retention period, running from 2002 and therefore

would not have been subject to any potential destruction until

2009. 

Incredibly, Ms. Matthews admitted that these documents

were not identified in her May 2005 affidavit in response to the

Magistrate’s Order, nor produced to plaintiff, until possibly

August 2005. Worse yet, Ms. Matthews’ supervisor, Betty

McDonald[,] failed to acknowledge the existence of these

documents in her August 2005 affidavit even following the

Magistrate’s Sanctions Order of July 27, 2005. Apparently,

certain of these documents may have been belatedly produced

without explanation by Compass in September 2005. Only after

Ms. Matthews’ damaging testimony, has Compass now offered

Plaintiff an opportunity to inspect these withheld records by

letter of October 10, 2005, after the close of discovery, and after

all fact depositions have been taken in the case.

...

During the deposition of Seavey Webb, a corporate

designee of Compass Bank, Plaintiff discovered that Compass’

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 35 of 54
11 To the extent that Continental intends to suggest to this Court that Compass still

has in its possession certain documents that it sought through discovery (Doc. 172, at 7

(contending that the Court is left with “the inference that the account opening documents still

exist”)), the undersigned would simply note that such suggestion plays no part in this order

inasmuch as Continental has not again sought to compel the production of any allegedly

withheld documents as invited by the Court in its May 20, 2005 Order (Doc. 51) nor can it now

move to compel production of these documents (id. at 8 (“This partial denial of the motion to

compel is without prejudice to plaintiff seeking the same or similar relief once it has received

and reviewed a certification to be provided by Compass no later than May 25, 2005, so long as

the request for a second review of issues raised in this motion to compel is accompanied by

36

branches had teller drawer/cash box key logs corresponding to

assigned teller stamp and numbers. These tellers’ numbers then

appeared on deposit slips for each transaction. Combining the

deposit slip and log for a particular day would reveal the

Compass employee who handled the transaction. Compass knew

about the logs, but failed to disclose them to Plaintiff or the

Court until their existence was revealed during Mr. Webb’s

deposition on the last day of discovery.

Moreover, Compass’ assertion that teller tapes that could

have identified tellers with respect to Ms. Howe’s transactions

are no longer available due to destruction based on Mr. Webb’s

affidavit cannot be sustained. This affidavit is misleading, as

Mr. Webb acknowledged at deposition, in that it did not account

for any teller tapes prior to July 1, 1997, nor did he check the

destruction list to confirm that the specific teller tapes for the

days at issue in this case after July 1, 1997, were in fact

destroyed. Instead, he just “scrolled down the list” to see that

Mobile branches were included. 

Taken together, on a critical issue of who accepted

Howe’s fraudulent deposits, Compass’ conduct in withholding

of relevant information and otherwise providing misleading

affidavits has frustrated plaintiff’s discovery and misled this

Court, and warrants the imposition of the most severe sanctions

by this Court.

(Doc. 158, at 16 & 17-18 (internal citations omitted))11

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 36 of 54
additional evidence and is filed within the discovery period.”)).

12 The only other case substantively cited by Continental, Bryte v. American

Household, Inc., 142 Fed.Appx. 699 (4th Cir. 2005), provides no persuasive authority inasmuch

as it is an unpublished decision.

37

5. In support of its argument, Continental relies almost solely upon

this Court’s decision in In re Amtrak “Sunset Limited” Train Crash in Bayou

Canot, Alabama on September 22, 1993, 136 F.Supp. 1251,1257 (S.D.Ala.),

aff’d, 29 Fed.Appx. 575 (11th Cir. 2001),12 wherein it was determined that

plaintiff Gary Farmer had perpetrated a fraud upon the Court and the

defendants by knowingly providing false answers in his answers to

interrogatories. This Court specifically noted that “‘a “fraud on the court”

occurs where it can be demonstrated, clearly and convincingly, that a party has

sentiently set in motion some unconscionable scheme calculated to interfere

with the judicial system’s ability impartially to adjudicate a matter by

improperly influencing the trier or unfairly hampering the presentation of the

opposing party’s claim or defense.’” Id. at n.11, quoting Aoude v. Mobil Oil

Corp., 892 F.2d 1115, 1118 (1st Cir. 1989). It is plaintiff’s position that the

affidavits of Webb, Matthews and McDonald have misled this Court and

frustrated its discovery on the critical issue of which teller accepted Howe’s

fraudulent deposits. (Doc. 158, at 18) 

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 37 of 54
13 Again, the undersigned notes that the Court invited plaintiff to re-file a motion to

compel directed to the very interrogatories and requests for production about which it was

claiming Compass had not been entirely forthcoming. (Doc. 51, at 8) Instead of filing such a

motion prior to the close of discovery, as required by the Court, plaintiff, instead, simply seeks

extreme sanctions against Compass. Accordingly, the undersigned stays focused solely upon the

issue of sanctions and will not address any implication by Continental that surely there must be

other responsive documents out there which Compass has failed to produce.

14 The simple answer to this latter argument, of course, is the obvious one that one

teller did not accept all of Howe’s fraudulent deposits. Putting aside the fancifulness of

plaintiff’s conspiracy theory argument that would tie Howe to one particular teller, or teller

supervisor, at Compass’ Crichton branch and that such person was involved in her fraud, the fact

remains that Continental has deposed all of the tellers and has not one shred of evidence from

those witnesses suggesting that one of them was directly involved in Howe’s fraud.

38

6. Plaintiff, in its submissions, however, has not “clearly and

convincingly” demonstrated to this Court that Compass, through the

submission of the affidavits of Matthews, Webb and McDonald, has either

improperly influenced this Court’s rulings13or frustrated its efforts to determine

which teller accepted Howe’s fraudulent deposits.14 Turning first to Webb’s

August 10, 2005 affidavit and his September 30, 2005 deposition testimony,

plaintiff contends the affidavit is “misleading . . . in that it did not account for

any teller tapes prior to July 1, 1997, nor did he check the destruction list to

confirm that the specific teller tapes for the days at issue in this case after July

1, 1997, were in fact destroyed.” (Doc. 158, at 18) The undersigned does not

find Webb’s affidavit misleading and Webb certainly never acknowledged that

it was misleading during his deposition. Webb never inserted any date in his

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 38 of 54
15 The argument that Webb did not check the destruction list to confirm that the

specific teller tapes for the days at issue were in fact destroyed really makes no sense to the

undersigned. As Webb testified during his deposition, “[w]e cannot go to Iron Mountain and

ensure that these are destroyed. We rely on Iron Mountain to destroy the boxes.” (Doc. 158,

Webb depo., at 127) It is clear to the undersigned that the boxes sent to Iron Mountain involving

those “crucial days” Continental makes reference to were destroyed. (See Doc. 102, Exhibits A

& B to Webb aff.)

16 That is, there was no misleading “by omission.”

39

affidavit and as he stated during his deposition he specifically instructed Iron

Mountain to provide him “with a list of all boxes as far as they can go back

that have been destroyed,” (Doc. 158, Deposition of Howard C.V. Webb, Jr.,

at 124) and his attachments to his affidavit reflect the information sent to him

by Iron Mountain (compare id. with Doc. 102, Webb aff. & Exhibits A & B).15

Therefore, the fact that no teller tapes were accounted for prior to July 1, 1997

does nothing other than reflect that Iron Mountain’s records went back no

further than July 1, 1997. (See Doc. 102, Exhibits A & B to Webb aff.)

Turning to McDonald’s August 10, 2005 affidavit, the undersigned finds

nothing particularly unconscionable or pernicious about Compass Bank’s

Senior Vice President’s failure to acknowledge in her affidavit the existence

of the documents about which Matthews acknowledged existed during her

September 30, 2005 deposition (see Doc. 158, Matthews depo., at 36-40)16

inasmuch as plaintiff has not shown that McDonald had any actual knowledge

of the existence of such documents, same being in a file on Matthews’ desk

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 39 of 54
40

and in one to three files in a filing cabinet in the research department.

McDonald’s affidavit was addressed to the requirements of the Court’s July

27, 2005 order regarding the bank’s destruction of documents; nothing about

that order required McDonald to scour the research department to make sure

there were no responsive documents prior to addressing the bank’s policy on

destruction of documents. Therefore, McDonald’s affidavit was neither false

nor misleading. 

7. The only problem for Compass relative to plaintiff’s

false/misleading affidavit argument is the May 20, 2005 affidavit of Erica

Matthews. Matthews’ affidavit necessarily must be read to suggest that

Compass Bank’s research manager had unearthed no documents in the bank’s

possession which related in any way to the two subpoenas served upon the

bank in the summer of 2002 (Doc. 58, Matthews aff.), yet at her September 30,

2005 deposition Matthews admitted that she, in fact, had certain monthly

account statements from 1996 and 1997 in a 2002 subpoena file or files (Doc.

158, Deposition of Erica Matthews, at 36-40). Compass, therefore, does not

argue that Matthews’ affidavit was not misleading in this regard. What the

defendant does argue, however, is that Continental was not prejudiced by any

falsity contained in that document inasmuch as Continental had in its

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17 The undersigned would note that the plaintiff has not satisfied its burden of

establishing that it is entitled to entry of a judgment in its favor for any reason set forth in its

omnibus motion for sanctions. That is, plaintiff has not established that Compass Bank has

willfully and in bad faith disregarded the orders of this Court and, therefore, it is not entitled to

entry of the ultimate sanction of a judgment in its favor. See Adolph Coors Co. v. Movement

Against Racism & the Klan, 777 F.2d 1538, 1542 (11th Cir. 1985) (“[T]he decision to enter a

default judgment [as a sanction under Rule 37(b)(2)(C)] ought to be the last resort- ordered only

if noncompliance is due to willful or bad faith disregard of court orders.”); Teletron, Inc. v.

Overhead Door Corp., 116 F.R.D. 107, 129 (S.D.Fla. 1987) (“[A] court’s discretion to impose

sanctions under Rule 37--particularly the entry of default or dismissal of an action--is limited by

important constitutional and policy considerations. . . . The imposition of a default judgment as a

Rule 37 sanction is controlled by the same guidelines as the entry of a dismissal order. . . . Both

are extreme remedies which should only be imposed if less drastic sanctions cannot properly

redress the wrongdoing.”).

41

possession at the time of Matthews’ deposition, as a result of a subpoena

served on the Alabama Department of Revenue, the very documents about

which Matthews gave testimony. (See Doc. 167, at 10) While Compass’

argument in this regard ultimately persuades the Court that the bank has not

perpetrated a fraud upon the Court, for purposes of granting plaintiff a default

judgment or striking the bank’s defenses,17 it goes without saying that had

Matthews been more diligent in her search for documents in May of 2005,

Continental would have come into possession of the aforementioned monthly

account statements in May, in response to plaintiff’s first set of interrogatories

and requests for production, as opposed to June of 2005. Accordingly, Rule

37(b) monetary sanctions are appropriate given Matthews’ negligent

representation that she knew of no documents in the bank’s possession related

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42

to the subpoenas served during the summer of 2002 and due to her failure to

revise her affidavit to acknowledge that she had unearthed these documents

(see Doc. 58, Matthews aff. (“[I]f there are additional records or documents

there that relate in any way to either of these subpoenas, I will supplement this

affidavit to describe them.”)). The issue of the amount of monetary sanctions

to be imposed will be taken up at the conclusion of the trial on the merits of the

case and will take the form of a small portion of the attorney’s fees expended

by plaintiff in filing the omnibus motion for sanctions, provided plaintiff’s

attorney files, on or before March 7, 2006, a good-faith estimate of the time

spent pursuing this single issue. The undersigned will take up at the conclusion

of this case the reasonableness of the attorney’s fees requested by plaintiff and

enter an appropriate sanctions award against Compass Bank.

C. Compass Bank’s Alleged Failure to Appear at its Rule

30(b)(6) Deposition.

8. Rule 37(d) of the Federal Rules of Civil Procedure provides that

“[i]f a party or an officer, director, or managing agent of a party or a person

designated under Rule 30(b)(6) or 31(a) to testify on behalf of a party fails (1)

to appear before the officer who is to take the deposition, after being served

with a proper notice . . . the court in which the action is pending on motion

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18 Rule 37(b)(2) and subparagraphs (A), (B), and (C) read, as follows:

If a party or an officer, director, or managing agent of a party or a person

designated under Rule 30(b)(6) or 31(a) to testify on behalf of a party fails to

obey an order to provide or permit discovery, including an order made under

subdivision (a) of this rule or Rule 35, or if a party fails to obey an order entered

under Rule 26(f), the court in which the action is pending may make such orders

in regard to the failure as are just, and among others the following:

(A) An order that the matters regarding which the order was made

or any other designated facts shall be taken to be established for

the purposes of the action in accordance with the claim of the party

obtaining the order;

(B) An order refusing to allow the disobedient party to support or

oppose designated claims or defenses, or prohibiting that party

from introducing designated matters in evidence; [and]

(C) An order striking out pleadings or parts thereof, or staying

further proceedings until the order is obeyed, or dismissing the

action or proceeding or any part thereof, or rendering a judgment

by default against the disobedient party[.]

Id.

43

may make such orders in regard to the failure as are just, and among others it

may take any action authorized under subparagraphs (A), (B), and (C) of

subdivision (b)(2) of this rule.18 . . . In lieu of any order or in addition thereto,

the court shall require the party failing to act or the attorney advising that party

or both to pay the reasonable expenses, including attorney’s fees, caused by

the failure unless the court finds that the failure was substantially justified or

that other circumstances make an award of expenses unjust.” Id. (footnote

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19 “[U]nlike subdivision (b) of Rule 37, on its face subdivision (d) does not require

the court, prior to imposing sanctions, to have issued an order compelling discovery.” Black

Horse Lane Assoc., L.P. v. Dow Chemical Corp., 228 F.3d 275, 302 (3rd Cir. 2000). 

44

added).19 It is the consensus of most federal courts to have considered the issue

that a failure to appear at deposition sanctionable under Rule 37(d)(1) includes

those circumstances in which a 30(b)(6) corporate designee appears at

deposition unprepared to testify. Black Horse Lane Assoc., L.P., supra, 228

F.3d at 304 (“[W]e hold that when a witness is designated by a corporate party

to speak on its behalf pursuant to Rule 30(b)(6), ‘[p]roducing an unprepared

witness is tantamount to a failure to appear’ that is sanctionable under Rule

37(d).”); Starlight Int’l Inc. v. Herlihy, 186 F.R.D. 626, 639 (D.Kan. 1999)

(“‘Producing an unprepared witness is tantamount to a failure to appear at a

deposition.’ . . . The court may find lack of preparation at a deposition to be a

failure to appear.”); United States v. Taylor, 166 F.R.D. 356, 363 (M.D.N.C.)

(“Producing an unprepared witness is tantamount to a failure to appear.”),

order aff’d, 166 F.R.D. 367 (M.D.N.C. 1996).

Rule 30(b)(6) streamlines the discovery process. It places the

burden of identifying responsive witnesses for a corporation on

the corporation. Obviously, this presents a potential for abuse

which is not extant where the party noticing the deposition

specifies the deponent. When a corporation or association

designates a person to testify on its behalf the corporation

appears vicariously through that agent. If that agent is not

knowledgeable about relevant facts, and the principal has failed

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45

to designate an available, knowledgeable, and readily

identifiable witness, then the appearance is, for all practical

purposes, no appearance at all.

Resolution Trust Corp. v. Southern Union Co., Inc., 985 F.2d 196, 197 (5th

Cir. 1993).

9. In Poole ex rel. Elliott v. Textron, Inc., 192 F.R.D. 494 (D. Md.

2000), the court explained at some length the duties and responsibilities of a

corporation and its counsel upon being served with a 30(b)(6) notice of

deposition outlining areas of inquiry.

Rule [30(b)(6)] provides that an organization named as a

deponent “shall designate one or more officers, directors or

managing agents, or other persons who consent to testify on its

behalf, and may set forth, for each person designated, the

matters on which the person will testify . . . a person so

designated shall testify as to matters known or reasonably

available to the organization.” Id. Thus, a corporation “should

make a diligent inquiry to determine what individual(s) is (are)

best suited to testify.” Civil Discovery Standards (American Bar

Association, Section of Litigation, August 1999) (“ABA

Standards”).

Moreover, a corporation served with a Rule 30(b)(6)

notice of deposition has a duty to “produce such number of

persons as will satisfy the request [and] more importantly,

prepare them so that they may give complete, knowledgeable

and binding answers on behalf of the corporation.” Marker v.

Union Fidelity Life Ins. Co., 125 F.R.D. 121, 126 (M.D.N.C.

1989). “Counsel for the entity should prepare the designated

witness to be able to provide meaningful information about any

designated area(s) of inquiry.” ABA Standards, 19(f) (Duty to

Prepare the Witness). The individual(s) so deposed are required

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 45 of 54
46

to testify to the knowledge of the corporation, not the individual.

United States v. J.M. Taylor, 166 F.R.D. 356, 361 (M.D.N.C.

1996). . . . It necessarily follows that the corporation has a duty

“to prepare the designees so that they may give knowledgeable

and binding answers for the corporation” and that this duty

“goes beyond matters personally known to the designee or to

matters in which that designee was personally involved.”

Taylor, 166 F.R.D. at 361. 

Upon notification of a deposition, the corporation has an

obligation to investigate and identify and if necessary prepare a

designee for each listed subject area and produce that designee

as noticed.

...

 A party cannot take a laissez faire approach to the inquiry. That

is, producing a designee and seeing what he has to say or what

he can cover. A party does not meet its obligations under . . .

Rule 30(b)(6) by figuratively “throwing up its hands in a gesture

of helplessnes[.]” . . . If the originally designated spokesman for

the corporation lacks knowledge in the identified areas of

inquiry, that does not become the inquiring party’s problem, but

demonstrates the responding party’s failure of duty.

Id. at 503-504 & 504 (footnote omitted; emphasis in original); see also

Starlight, supra, 186 F.R.D. at 639 (“Corporations, partnerships, and joint

ventures have a duty to make a conscientious, good-faith effort to designate

knowledgeable persons for Rule 30(b)(6) depositions and to prepare them to

fully and unevasively answer questions about the designated subject matter.

. . . If the designated persons ‘do not possess personal knowledge of the

matters set out in the deposition notice, the [entity] is obligated to prepare the

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47

designees so that they may give knowledgeable and binding answers for the

[organization].’ . . . ‘[I]f it becomes obvious during the course of a deposition

that the designee is deficient, the [organization] is obligated to provide a

substitute.’”); Bank of New York v. Meridien BIAO Bank Tanzania Ltd., 171

F.R.D. 135, 150 & 151 (S.D.N.Y. 1997) (“While Rule 30(b)(6) ‘is not

designed to be a memory contest[,]’ . . . the deponent must be both

knowledgeable about a given area and prepared to give complete and binding

answers on behalf of the organization. . . . The deponent must prepare the

designee to the extent matters are reasonably available, whether from

documents, past employees, or other sources.”); United States v. Taylor, supra,

166 F.R.D. at 361 (“The testimony elicited at the Rule 30(b)(6) deposition

represents the knowledge of the corporation, not of the individual deponents.

. . . Thus, the duty to present and prepare a Rule 30(b)(6) designee goes

beyond matters personally known to that designee or to matters in which that

designee was personally involved. . . . The Rule 30(b)(6) designee does not

give his personal opinions. Rather, he presents the corporation’s “position” on

the topic. . . . Moreover, the designee must not only testify about facts within

the corporation’s knowledge, but also its subjective beliefs and opinions. . . .

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20 The undersigned is mindful of one District Court’s view that before a trial court

may impose sanctions upon a party for failure to appear under Rule 37(d)(1), “‘the inadequacies

in a deponent’s testimony must be egregious and not merely lacking in desired specificity in

discrete areas.’” Bank of New York, supra, 171 F.R.D. at 151, quoting Zappia Middle East

Constr. Co., Ltd. v. Emirate of Adu Dhabi, 1995 WL 686715, at *8 (S.D.N.Y. 1995). 

21 Branson received a voice-mail from an attorney for Compass in Birmingham on

Friday, September 16, 2005, requesting that she be the corporate designee; she accepted this

assignment on Monday, September 19, 2005. (Id. at 92-93)

22 See Poole, supra, 192 F.R.D. at 504 (“Upon notification of a deposition, the

corporation has an obligation to investigate and identify and if necessary prepare a designee for

each listed subject area and produce that designee as noticed.”).

48

The corporation must provide its interpretation of documents and events.”).20

10. It is with these legal principles in mind, along with the noticed

areas of inquiry, that the undersigned read the entirety of Branson’s 30(b)(6)

deposition taken on September 29, 2005 (Doc. 158, Deposition of Sharon

Branson) as well as her supplemental deposition on December 15, 2005 (Doc.

233, Exhibit A). Having read Branson’s initial and supplemental depositions,

the undersigned is at once struck by how little time the deponent spent

readying herself for the 30(b)(6) deposition. (Doc. 158, Deposition of Sharon

Branson, at 91-92 (she spent a total of three hours reviewing materials, merely

glancing at some))21 Branson conducted no investigation into the matter

regarding the bank’s role in the case (id. at 94)22 and spent a scant one and onehalf hours meeting with Compass Bank’s attorney, George Walker, Esquire,

prior to the September 29, 2005 30(b)(6) deposition (id. at 95). Despite this

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49

laissez faire attitude toward preparation, the undersigned cannot find that

Branson wholly failed to appear for purposes of entering a default judgment

against Compass or striking any of the defendant’s defenses, see Searock v.

Stripling, 736 F.2d 650, 653 (11th Cir. 1984) (“[T]he district court’s discretion

under Rule 37 is broad but not unlimited. The limits placed on this discretion

have been fashioned in light of the recognition that dismissal under Rule 37 ‘is

a sanction of the last resort, applicable only in extreme circumstances. . . . A

finding of such extreme circumstances necessary to support the sanction of

dismissal must, at a minimum, be based on evidence of the sanctioned party’s

willfulness, bad faith or fault in failing to comply with a discovery order.”),

inasmuch as, in truth, Branson did appear and give significant testimony with

respect to several areas of inquiry listed on the revised notice of deposition (id.

at 289-340 (Bank’s position on Items 10 and 17(b) set out in the revised notice

of deposition); see also id. at 253 (answered Item 14 with testimony that

Compass took no subsequent remedial measures following discovery of

Howe’s check fraud scheme)). Nonetheless, Branson could not give Compass’

position on several other areas of inquiry noticed by the plaintiff (see, e.g, id.

at 107-108 (relevant to Item 12, the witness did not know what the Bank’s

knowledge of SCI, the insured, was between 1995 and 2002); id. at 245

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50

(relevant to Item 13, Branson could not testify on behalf of the bank on what

date outside counsel was hired to conduct an investigation into Howe’s check

fraud scheme); id. at 259 (relevant to Item 15, Branson admitted that she was

“not prepared to testify on behalf of the bank as to any communications the

bank had with Federal regulatory authorities[]” and admitted, moreover, that

she did not know who the federal regulatory authority might be); compare id.

at 266-272 (relevant to Item 16(b), Branson admitted that she had not pulled

the HR records on Jennifer Gaston or Helen Sylvester) with Doc. 233,

December 15, 2005 Deposition of Sharon Branson, at 14 (designee again

admits that she did not read any of the “separation” memoranda in Sylvester’s

personnel file in preparation for her deposition) and 51-52 (Branson stated she

did not have Compass’ HR records with her and needed same to determine that

status of Gaston’s employment); Doc. 158, Branson depo., at 114-115

(relevant to Item 11, Branson testified that she had no knowledge of the bank’s

knowledge of any items over $2,500.00 involving any of Howe’s accounts

with Compass), and though Compass’ counsel often made the argument that

objections were lodged to these areas of inquiry and that same were not

relevant to this law suit (see, e.g., id. at 126 (‘[W]e would note that this is

questioning on a completely irrelevant topic relating to an account that’s not

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51

involved in the check fraud scheme in this case, relating to non-sufficient

funds that have no relations at all to any issue in this case. We have the witness

here and ready to testify on behalf of the bank in response to relevant questions

regarding the circumstances involved in this case, and I don’t think Rule

30(b)(6) requires that we produce a witness for a fishing expedition on

irrelevant, immaterial matters.”); id. at 148 (“Once again, it’s an irrelevant

account. It doesn’t have anything to do with this lawsuit.”); id. at 268 & 270

(“We objected and have objected and filed an objection to this particular

request because it seeks information that’s not relevant to the subject matter

of this lawsuit. . . . Well, we have objected and the witness is here and she’s

ready to testify if you want to show her some records as you mentioned in

16(b).”), such argument cannot wholly shield defendant from sanctions since

Compass failed to obtain a protective order preventing plaintiff’s counsel from

delving into these noticed areas of inquiry, see Fed.R.Civ.P. 37(d) (“The

failure to act described in this subdivision may not be excused on the ground

that the discovery sought is objectionable unless the party failing to act has a

pending motion for a protective order as provided by Rule 26(c).”). In other

words, defense counsel could object to his heart’s content on the basis that, for

instance, inquiry into all of Howe’s accounts at Compass, save for the fraud

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23 It is not lost on this Court, nor should it be lost on the parties, that the discovery

phase of this case has been the one of the most contentious the undersigned has ever observed in

his career as a Magistrate Judge, and while, in most cases, the parties would not be presenting

the type of discovery motions that have become routine in this case, the realities of this case are

that counsel appear more focused on garnering their pound of flesh as opposed to adjudicating

the merits of the action. 

24 The undersigned recognizes that a problem thread throughout the 30(b)(6)

designee’s deposition was the fact that many of the documents plaintiff’s counsel made reference

to in a general manner (i.e., opening, maintenance, and closing documents) do not exist because

of Compass’ destruction of same pursuant to their retention policy. However, given the manner

in which plaintiff’s counsel posed questions regarding documentation, the deponent often stated

that she did not review such documentation on behalf of the defendant or that she had no

knowledge on the bank’s behalf regarding same instead of explicitly stating that she could not

answer on the basis that the bank’s records relating to the particular account she was being

questioned about, as the bank’s designee, no longer existed. The “confusion” created by the

deponent’s answers to Mr. Ludwig’s general questions, however, reflect nothing more or less

than the deponent’s general lack of preparedness for several areas of inquiry noticed by the

plaintiff. See Poole, supra, 192 F.R.D. at 503 (“[C]ounsel for the entity should prepare the

designated witness to be able to provide meaningful information about any designated area(s) of

inquiry.”).

25 In other words, Branson was wholly unprepared to state the bank’s position

regarding several areas of inquiry.

52

account, was irrelevant but in absence of a protective order, at least in this

particular case,23 the 30(b)(6) designee was required to give the bank’s position

on all questions regarding each account.24

11. In light of the foregoing, the undersigned determines that

Compass Bank should be sanctioned for the failure of its corporate designee,

Sharon Branson, to “appear,” as that phrase is understood,25 for several areas

of inquiry noticed by the plaintiff in its revised notice of deposition. The

appropriate sanction does NOT include entry of a judgment in the plaintiff’s

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53

favor or the striking of any defense asserted by Compass; instead, the

appropriate sanction is found to be an order, pursuant to Rule 37(d), that

Compass pay to Continental all costs and attorney’s fees associated with the

actual taking (as opposed to preparation time) of Branson’s 30(b)(6) deposition

on September 29, 2005, provided the plaintiff file an itemization of the costs

and fees associated with the taking of this deposition on or before March 17,

2006. As with all other monetary sanctions entered in this case, the

undersigned will take up at the conclusion of this case the reasonableness of

those costs and fees and enter an appropriate sanctions award against Compass

Bank. 

CONCLUSION

Plaintiff’s omnibus motion for sanctions (Doc. 158) is due to be

GRANTED IN PART and DENIED IN PART. Plaintiff has not proven its

allegation of spoliation of evidence nor has it shown that the defendant should

be sanctioned for any of its transgressions by entry of a judgment in plaintiff’s

favor or the striking of defenses asserted by Compass Bank. However, it is

clear to the undersigned that Compass Bank should be sanctioned for the

negligent representation in Erica Matthews’ affidavit that she knew of no

documents in the bank’s possession related to the subpoenas served during the

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54

summer of 2002 as well as Matthews’ failure to revise her affidavit

acknowledging the discovery of these documents. As set forth in the body of

this order, the issue of the amount of monetary sanctions to be imposed will be

taken up at the conclusion of the trial on the merits of the case and will take the

form of a small portion of the attorney’s fees expended by plaintiff in filing the

omnibus motion for sanctions, provided plaintiff’s attorney files, on or before

March 17, 2006, a good-faith estimate of the time spent pursuing this single

issue. In addition, defendant is due to be sanctioned for the failure of its

corporate designee, Sharon Branson, to appear for the 30(b)(6) deposition

prepared to give knowledgeable and binding answers for the corporation on

all areas of inquiry noticed by the plaintiff. The appropriate sanction in this

regard, which will be considered following a merits decision, will be an order

that Compass Bank pay to Continental all costs and attorney’s fees associated

with the actual taking (as opposed to preparation time) of Branson’s 30(b)(6)

deposition on September 29, 2005, provided the plaintiff file an itemization of

the costs and fees associated with the taking of this deposition on or before

March 17, 2006.

DONE and ORDERED this the 3rd day of March, 2006.

 s/WILLIAM E. CASSADY 

UNITED STATES MAGISTRATE JUDGE

Case 1:04-cv-00766-KD-C Document 261 Filed 03/03/06 Page 54 of 54