Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-06247/USCOURTS-cand-4_06-cv-06247-6/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1132 E.R.I.S.A.: Employee Benefits

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

CONSTANCE FINLEY,

Plaintiff,

 vs.

HARTFORD LIFE AND ACCIDENT

INSURANCE COMPANY; THE BOSTON

FINACIAL GROUP LONG-TERM

DISABILITY PLAN; and DEMPSEY

INVESTIGATIONS, INC.,

Defendants. /

No.06-6247 CW (MEJ) 

ORDER GRANTING PLAINTIFF'S

MOTION FOR SANCTIONS AND

STRIKING PLAINTIFF'S REPLY TO

DEFENDANT'S OPPOSITION

I. Introduction

Before the Court is Plaintiff Constance Finley's Motion for Sanctions. Plaintiff seeks both

economic and monetary relief. She seeks the following sanctions: (1) That Plaintiff Hartford Life

and Accident Insurance Company, ("Hartford") and its counsel pay all fees and cost incurred by

Plaintiff related to her expert Tim Scmolder; (2) That Hartford and its counsel pay all fees and costs

incurred by Plaintiff related to the depositions of Shawn Dempsey, Richard Sawn, and Jarred

Morgan; (3) That Plaintiff may submit and rely on expert testimony regarding the surveillance

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videos produced on July 26, 2007. After careful consideration of the parties' papers and oral

arguments, the applicable statutory and case law authorities, and good cause appearing, the Court

hereby issues the following order.

II. Background

Plaintiff filed her complaint on October 4, 2006, claiming that Defendant Boston Financial

Group Long-Term Disability Plan ("Plan") wrongfully terminated her disability benefits in violation

of the Employee Retirement Income and Security Act ("ERISA"). In addition, Plaintiff seeks relief

against Defendant Hartford Life and Accident Insurance Company ("Hartford") and Dempsey

Investigations ("Dempsey") for trespass and violation of her right to privacy. Plaintiff contends that

Hartford violated her right to privacy by causing its agent Dempsey to trespass onto her land and

film her and her roommate through the kitchen window of Plaintiff's home.

On October 24, 2008, Plaintiff filed the Motion for Sanctions which is now before the Court.

In her motion, Plaintiff alleges that Hartford had in its possession surveillance video of the Plaintiff

in her kitchen ("kitchen video"), taken by Dempsey in February of 2001 and failed to disclose this

video in violation of Federal Rule of Civil Procedure 26(a); that Hartford's attorney certified

Hartford's initial and incomplete disclosure in violation of Federal Rule of Civil Procedure 26(g);

and that Defendant failed to produce the kitchen video even though producing it was clearly

responsive to her March 9, 2007 request for production. 

Plaintiff asks the Court for sanctions in the amount of the costs and attorney's fees she spent:

(1) taking the depositions of Dempsey CEO, Shawn Dempsey, its vice president, Richard Sawn, and

Jarred Morgan the investigator who took the surveillance video as to the content of the video, and

(2) retaining the services of an expert. Plaintiff asserts that she took these depositions and engaged

this expert solely Defendant did not provide her with the kitchen video in a timely manner, and that

she would not have otherwise engaged the expert, or taken these depositions.

III. Discussion

 A. Legal Standard

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Federal Courts have the authority to sanction litigants for discovery abuses both under the

Federal Rules of Civil Procedure and pursuant to the court's inherent power to prevent abuse of the

judicial process. See Chambers v. NASCO, Inc. 501 U.S. 32, 45-46 (1991); In re Matter of Yagman,

796 F.2d 1165, 1187 (9th Cir. 1986). Specifically, where a party fails to disclose or supplement as

required by Federal Rule of Civil Procedure 26(a) or (e), Federal Rule of Civil Procedure 37

authorizes the court to impose a range of sanctions, including, inter alia, ordering payment of

reasonable expenses, including attorney's fees cause by the failure. Fed. R. Civ. P. 37(c)(1). Under

Rule 37, the standard of sanctionable misconduct is generally one of objective reasonableness.

Oregon RSA No. 6, Inc., v. Castle Rock Cellular of Or. Ltd. P'ship, 76 F.3d 1003, 1007 (9th Cir.

1996) (discussing Rule 26(g); Marquis v. Chrysler Corp., 577 F.2d 624, 642 (9th Cir.

1989)(discussing Rule 37). In Contrast, a showing of bad faith is required to impose sanctions under

the court's inherent power. See Chambers, 501 U.S. at 50; Zimbrano v. City of Tustin, 885 F.2d.

1473, 1478 (9th Cir. 1989). Furthermore, "when there is bad-faith conduct in the course of litigation

that could be adequately sanctioned under the Rules, the court ordinarily should rely on the Rules

rather than [its] inherent power." Chambers, 501 U.S. at 50. In either case, the decision to impose

sanctions lies within the sound discretion of the district court. Lasar v. Ford Motor Co. 399 F.3d

1109 (9th Cir. 2005)(reviewing sanctions imposed under the court's inherent power); Payne v. Exxon

Corp., 121 F., 121 F.3d 503, 510 (9th Cir. 1997) (upholding sanctions imposed under the Federal

Rules of Civil Procedure).

 B. Failure to Make Initial Disclosure of Kitchen Video

Federal Rule of Civil Procedure 26(a) requires a party to disclose all documents, including

electronically stored information, that the party may use to support its claims or defenses without

awaiting a discovery request. Federal Rule of Civil Procedure 26 (e) requires a party who has made a

disclosure under subdivision (a) or responded to include information later required.

Hartford and the Plan served their Rule 26 initial disclosures on January 19, 2007. (Roberts

Decl., Ex. 20, McIsaac Decl., ¶4.) Defendant indicated that they were disclosing a copy of the

administrative record related to Plaintiff's disability claim, and produced copies of the claim file,

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1

 The Court is aware and accepts Defendant's explanation of

Hartford's procedure for archiving and accessing files in the event

of litigation as described in the Declaration of John Snow.

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electronic notes, Special Investigations Unit ("SIU") file, surveillance videos of February 2001 and

October 2001, conducted by Dempsey (which Hartford's SIU investigative analyst received directly

from Dempsey in 2005), and HUB Enterprises. (id.) Due to what Hartford calls an "administrative

oversight", the video disclosed was not the full version of the February 2001 surveillance and did not

contain the footage of Plaintiff in her kitchen1

. (see Declaration of John Snow "Snow Decl.")

Hartford argues that it complied with its usual procedure and that a reasonable search was done, and

that as soon as it discovered that the full video had not been disclosed it complied with Fed. R. Civ.

P. 26(e) and supplemented its earlier disclosure. 

Though the Court agrees that an administrative oversight contributed to Hartford's failure to

do its initial disclosures, the Court does not agree that a reasonable search was done. Hartford cannot

escape the fact that it hinged responsibility for these disclosures entirely on the shoulders of an

administrative assistant. When she failed to search the "old database" as Hartford's own policy

required, the kitchen video was not discovered, even though it was not lost or misplaced. The Court

finds it unreasonable for Hartford to rely on a system which contains so few checks and balances

that the mere fact that an administrative assistant did not look for a file, in the filing cabinet where

that file was normally kept, could undermine Hartford's entire initial disclosure apparatus. The file

was where it was supposed to be. It was unreasonable for Hartford not to find it there at the point of

its initial disclosures. Therefore the Court finds that Hartford violated Federal Rule of Civil

Procedure 26(a)

Hartford argues that it turned over the video as soon as it was found and therefore complied

with Rule 26(e). Though it is true that Hartford eventually turned over the kitchen tape, it is also true

that a reasonable search would have turned up the tape for disclosure in January of 2007 rather than

July.

 C. March 9, 2007 Request for Production

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Next Plaintiff argues that the kitchen video should have been turned over as clearly

responsive to Plaintiff's First Request for Production of Documents. Even if the Court construes

Plaintiff's request to cover the kitchen video, the plaintiff assertion that the request was "clearly

requested" is not supported. Despite assertions that the tape was essential to her case on the right to

privacy and trespass issues, the Court can find nowhere in the record after the filing of this lawsuit 

where the Plaintiff asked Hartford for the missing tape with specificity, or otherwise put the

defendants on notice that the kitchen part of the video was missing. This is especially true in light of

the fact that Plaintiff specifically asked Defendant Dempsey Investigations for video. 

 D. Hartford's Attorney's Certification of Initial Disclosures.

Defendant requests sanctions against Hartford's attorney for failure to perform a reasonable

inquiry as required by Federal Rule of Civil Procedure 26(g)(2). Hartford's attorney counters that a

reasonable inquiry was performed and that there is no evidence of bad faith. The Court finds that

Hartford's attorney should have diligently supervised the methods Hartford used to gather material

for discovery. Doing so may have avoided much of the controversy now before the Court. The Court

further finds that Hartford did not make the requisite "reasonable inquiry" required by Rule 26(g).

However, since Hartford's attorneys relied, however erroneously, on Hartford's defective search

methods, the Court finds they were negligent but did not act in bad faith in certifying Hartford's

discovery. In light of the fact that plaintiff did not serve a clear and concise request for the tape from

the attorneys before embarking on reconstructing it, the court declines to sanction Hartford's

attorneys in this instance for their negligence. 

IV. REMEDIES

Plaintiff seeks monetary sanctions against Hartford in the amount that she would have

otherwise not spent on attorney's fees and costs had the Defendant disclosed the kitchen video and

turned it over in a timely manner. These fees are governed by Rule 37(c)(1), which provides that the

court may require payment of reasonable expenses, including attorney's fees, caused by the failure.

In calculating "reasonable attorney's expenses," the Court uses the lodestar approach, multiplying the

time reasonable expended on the motion by a reasonable rate. See Kraszewski v. State Farm Ins.

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2

 In Kerr, which was decided before teh lodestar approach was

adopted by the Supreme Court as the starting point for determining

reasonable fees in Hensley v. Eckerhart, 461 U.S. 424, 433 (1983), the

Ninth Circuit adopted the 12-factor test articulated in Johnson v.

Georgia Highway Express, Inc., 488 F.2d. 714 (5th Cir. 1974). This

analysis looked to the following factors for determining reasonable

fees: (1) the time and labor required, (2) the novelty and difficulty

of the questions involved, (3) the skill requisite to perform the

legal service properly, (4)the preclusion of other employment by the

attorney due to acceptance of the case,(5)the customary fee (6)whether

the fees is fixed or contingent, (7)time limitations imposed by the

client or circumstances,(8)the amount involved and the results

obtained,(9)the experience, reputation, and ability of the attorneys,

(10)'the undesirability' of the case,(11)the nature and length of the

professional relationship with the client, and(12) awards in similar

cases. Kerr 526 F.2d at 70.

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Agency, 1984 WL 1027 (N.D. Cal.)(applying lodestar approach to calculate attorney's fees awarded

to party that prevailed on Rule 37 motion for discovery abuse.)

In calculating the lodestar amount, the Court considers any of the factors listed in Kerr v.

Screen Extras Guild, Inc., 526 F.2d 67 (9th Cir. 1975), cert denied 425 U.S. 951 (1976), that are

relevant.2 See Jordan v. Multnomah County, 815 F.2d 1258, 1264 n. 11 (9th Cir. 1987)(noting that

the Ninth Circuit no longer requires that district court address every factor listed in Kerr). To the

extent that the Kerr factors are not addressed in the calculation of the lodestar, they may be

considered in determining whether the fee award should be adjusted upward or downward, once the

lodestar has been calculated. Chalmers v. City of Los Angeles, 796 F2d 1205, 1212. However, there

is a strong presumption that the lodestar figure represents a reasonable fee. Jordan, 815 F.2d at

1262.

In this case the Plaintiff's attorney submitted an extensive list of attorney's fees and costs

totaling $57,888.50. Plaintiff calculates these fees as costs directly related to preparing for and

taking the depositions of Mr. Dempsey, Mr. Sawn, and Mr. Morgan, and having to hire the Mr.

Schmolder as an expert. She asserts that the depositions would have been unnecessary, and she

would not have engaged an expert, had she had access to the kitchen tape at a more timely point in

the litigation. The Court does not agree. The Court rejects the assertion that none of the work done

would have been done if the tape had been turned over earlier, and finds that a prudent attorney

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would have done much of the discovery, and hired an expert whether or not he or she had access to

the tape early in the discovery process. The fact that Plaintiff used the much the information at the

summary judgement stage bears this out. The Court has no doubt that some of the enumerated costs

and fees would not have been necessary if she had earlier access to the kitchen video, but does not

accept counsel's argument that she would not have expended any of the stated amount if the video

were made available earlier. The Court must therefore use its discretion to determine a reasonable

sanction. The Court therefore sanctions Hartford in the amount of $9000.00.

The Defendant's Motion to strike Plaintiff's Reply to Defendant's Opposition is granted. In

her Reply not only does the Plaintiff raise new issues but she attempts to do what she did not do in

her original motion Plaintiff cannot do this for the first time in her reply . She tries to establish the

reasonableness of her attorney's fees and justify many of the costs she incurred as being solely

attributable to the Defendant's failure to timely turn over the kitchen video and her Reply continues

to fail to meet her burden of adequate specificity. The Court strikes Plaintiff's reply. 

V. Conclusion

The Court hereby strikes the Plaintiff's reply to the extend noted above, and sanctions

Hartford in the amount of $9000.00.

IT IS SO ORDERED.

Dated: February 22, 2008 

MARIA-ELENA JAMES

United States Magistrate Judge

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