UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

LAW ENFORCEMENT ALLIANCE OF 

AMERICA, INCORPORATED,

Plaintiff-Appellant,  No. 02-1715

v.

USA DIRECT, INCORPORATED,

Defendant-Appellee. 

Appeal from the United States District Court

for the Eastern District of Virginia, at Alexandria.

Gerald Bruce Lee, District Judge.

(CA-01-930-A)

Argued: January 24, 2003

Decided: March 14, 2003

Before WILLIAMS and KING, Circuit Judges, and

HAMILTON, Senior Circuit Judge.

Affirmed in part, reversed in part, and remanded by unpublished per

curiam opinion. 

COUNSEL

ARGUED: Richard E. Gardiner, Fairfax, Virginia, for Appellant.

John Hardin Young, SANDLER, REIFF & YOUNG, P.C., Washington, D.C., for Appellee. ON BRIEF: Joseph E. Sandler, SANDLER,

REIFF & YOUNG, P.C., Washington, D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c). 

OPINION

PER CURIAM: 

Law Enforcement Alliance of America, Inc. (LEAA), appeals (1)

the district court’s grant of summary judgment to U.S.A. Direct, Inc.

(USAD), on LEAA’s claim that USAD breached an implied in fact

agreement by failing to guarantee payment of $25,000 per month to

LEAA for the months of April 2001 through September 2001; (2) the

district court’s grant of summary judgment to USAD on USAD’s

counterclaim that it is entitled to $107,295.46 in unpaid invoices, plus

finance charges, for direct mail services that USAD provided to

LEAA; and (3) the district court’s upholding of the magistrate judge’s

award of discovery sanctions against LEAA under Rule 37 of the

Federal Rules of Civil Procedure for abuse of the discovery process.

For the reasons that follow, we affirm in part, reverse in part, and

remand for further proceedings. 

I.

In 1993, USAD, a Pennsylvania corporation, began providing

direct mail services for LEAA, a Virginia corporation.1 The direct

mail services in this case involved raising funds for LEAA by soliciting new memberships and membership renewals. LEAA participated

in designing mailings that USAD then printed and mailed to the

addresses on a mailing list provided by LEAA. When the recipients

mailed in their membership dues, an escrow agent collected the mail

and deposited the funds into an escrow account. After USAD provided the direct mail services, it would send an invoice to LEAA, and

then USAD would be paid out of the funds in the escrow account. The

1Because this appeal comes to us from the district court’s grant of

summary judgment on USAD’s motion, we view the evidence in the

light most favorable to LEAA, the nonmoving party. See Matsushita

Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). 

2 LAW ENFORCEMENT ALLIANCE v. USA DIRECT
parties entered into an agreement with Washington Intelligence

Bureau, Inc. (WIB) establishing WIB as the escrow agent who would

hold funds raised through USAD’s direct mail services (1993 Agreement). Although, by its terms, the 1993 Agreement stated that it

would be in force from March 1, 1993 to January 1, 1995, the parties

continued using WIB as an escrow agent until early 2001. In June

1995, at the request of USAD, LEAA completed and signed a credit

application (1995 Credit Application), wherein LEAA agreed to the

following terms: "Our Terms are Net Due Upon Receipt. A finance

charge of eighteen (18%) percent will be applied to all balances outstanding over thirty (30) days." (J.A. at 15-16.) The 1995 Credit

Application contained no expiration date. 

In October 1997, USAD and LEAA entered into another agreement

(1997 Agreement), which expressly incorporated terms "comparable

to the arrangement [the parties had] worked under since 1995." (J.A.

at 24.) The parties agreed to continue using the escrow mechanism

and that funds from the escrow account would be distributed as follows: LEAA would receive $20,000 per month,2

 then USAD would

be paid the amount due on outstanding invoices, and LEAA would

receive any remaining funds. 

By its terms, the 1997 Agreement ended in September 2000,3

although the parties continued their business relationship through January 2001, unaware that the agreement had ended. When USAD realized that the 1997 Agreement had expired, it notified LEAA by

proffering a new agreement that proposed to modify some the terms

of the 1997 Agreement and to lower LEAA’s monthly draws to

$16,250 per month (2001 Proposed Agreement). LEAA rejected the

2On January 7, 1999, both parties agreed in writing to amend the 1997

Agreement to increase the monthly amount LEAA received from the

escrow account from $20,000 per month to $25,000 per month. 

3The 1997 Agreement specifically states, "The term of this agreement

shall be three years beginning October 1, 1997 and extending until September 1, 2000." (J.A. at 25 ¶ 6.) The parties dispute whether the 1997

Agreement terminated on September 1, 2000, or September 30, 2000.

Viewing the evidence and inferences in the light most favorable to

LEAA, we assume that the 1997 Agreement terminated on September

30, 2000. 

LAW ENFORCEMENT ALLIANCE v. USA DIRECT 3
2001 Proposed Agreement and did not make a counter-offer. Without

any contract or agreement, all services occurring after January 31,

2001, were provided by USAD on a pre-paid, "pay as you go," basis.

LEAA received $25,000 per month from the escrow account from

September 2000 through January 2001, $23,000 in February 2001,

and nothing in March 2001. USAD performed no more direct mail

services for LEAA and, on April 26, 2001, LEAA withdrew the

remaining balance of approximately $80,000 from the escrow

account. 

In May 2001, LEAA filed a Motion for Judgment in Virginia Circuit Court alleging that, although the 1997 Agreement expired in September 2000, there was an implied in fact contract that continued the

1997 Agreement relationship between the parties until October 2001

and that LEAA was entitled to the $25,000 per month it would have

received from the escrow account for the months of April through

October. USAD removed the case to federal court based on diversity

jurisdiction and counterclaimed for outstanding payments and finance

charges due under seven invoices for direct mail services provided to

LEAA, asserting theories of breach of contract, unjust enrichment,

and quantum meruit. In the district court, LEAA conceded that it was

not entitled to any funds for October 2001, and thus, that its total

damage claim was $150,000, $25,000 per month from April through

September 2001. 

On December 28, 2001, USAD filed a motion for summary judgment with respect to LEAA’s claim and USAD’s counterclaims. Following this motion, LEAA belatedly produced four of the seven

invoices relating to USAD’s counterclaims, which LEAA had previously denied existed, and which it had failed to produce in both its

mandatory disclosures and its responses to USAD’s requests for production. The district court granted USAD’s summary judgment

motion on both LEAA’s claim and USAD’s counterclaim and granted

USAD damages of $107,295.46, plus finance charges,4 for the seven

outstanding invoices, but denied USAD attorney’s fees. USAD then

moved for sanctions against LEAA for withholding the four invoices,

4The parties stipulated that the finance charges awarded by the district

court on January 31, 2002, were $19,375, plus daily interest of $53.64

on and after February 1, 2002. 

4 LAW ENFORCEMENT ALLIANCE v. USA DIRECT
which a magistrate judge granted. After the district court affirmed the

sanctions of $6,169 over LEAA’s objections and entered a final summary judgment order, LEAA timely appealed. We first address

LEAA’s arguments regarding the district court’s grant of summary

judgment to USAD and then address the discovery sanctions. 

II.

We review a grant of summary judgment de novo. Higgins v. E.I.

DuPont de Nemours & Co., 863 F.2d 1162, 1167 (4th Cir. 1988). In

conducting this review, we apply the same legal standards as the district court. Ramos v. S. Md. Elec. Coop., Inc., 996 F.2d 52, 53 (4th

Cir. 1993). The district court should only grant a motion for summary

judgment where there is no genuine dispute as to an issue of material

fact, and the moving party is entitled to summary judgment as a matter of law. See Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 247-48 (1986). The party bearing the burden at trial

must demonstrate that a triable issue of fact exists; it may not rest

upon mere allegations or denials. Anderson, 477 U.S. at 248. 

A.

On appeal, LEAA first contends that its "undisputed evidence

demonstrate[s], from the conduct of the parties, that there was a meeting of the minds that the parties agreed to continue to operate under

the terms of the 1997 Letter Agreement upon its expiration for a

period of one year, beginning October 1, 2000 and expiring September 30, 2001." (Appellant’s Br. at 10.) Thus, LEAA claims that the

district court erred by granting USAD summary judgment because an

implied in fact contract was formed between the parties, entitling

LEAA to $25,000 per month from April 2001 through September

2001, for a total of $150,000. 

Under Virginia law, 

A contract implied in fact is a true contract, the agreement

of the parties being inferred from the circumstances . . . . A

"contract implied in fact" presupposes an obligation arising

from mutual agreement and intent to promise, which agreeLAW ENFORCEMENT ALLIANCE v. USA DIRECT 5
ment and promise have not been expressed in words, and it

requires a meeting of the minds just as much as an express

contract. 

4A Michie’s Jurisprudence of Virginia and West Virginia, Contracts,

§ 99 at 561 (footnotes omitted), quoted in Commonwealth Biotechnologies, Inc. v. Va. Commonwealth Univ., 2002 WL 1426143, *4

(Va. Cir. Ct. 2002). At trial, LEAA would have had the burden of

proof of establishing the implied in fact contract it alleged and its

breach. Dickerson v. Conklin, 235 S.E.2d 450, 455 (Va. 1977).

Because a "meeting of the minds is essential to the formation of a

contract," Marefield Meadows, Inc. v. Lorenz, 427 S.E.2d 363, 365

(Va. 1993), to overcome a motion for summary judgment LEAA must

present sufficient evidence to demonstrate a triable issue of fact as to

whether there was a meeting of the minds. Celotex v. Catrett, 477

U.S. 317, 323 (1986) ("The moving party is ‘entitled to a judgment

as a matter of law’ because the nonmoving party has failed to make

a sufficient showing on an essential element of her case with respect

to which she has the burden of proof." (quoting Fed. R. Civ. P.

56(c))). 

To show that there was meeting of the minds, LEAA exclusively

relies on a conclusory assertion by its president that "[b]ased upon the

actions of the parties through about January, 2001, there was mutual

assent that the terms of the 1997 Letter Agreement, including the

guaranteed $25,000/month, would continue for another year." (J.A. at

182.) Evidence presented in opposition to a motion for summary

judgment, however, must be probative, not merely colorable, Anderson, 477 U.S. at 256-57, and cannot be merely "conclusory statements

. . . without specific evidentiary support," Causey v. Balog, 162 F.3d

795, 801-02 (4th Cir. 1998) ("Causey made conclusory statements

that Montgomery treated him less favorably than younger black and

white employees of similar rank. Causey’s conclusory statements,

without specific evidentiary support, cannot support an actionable

claim for harassment."). LEAA’s president’s statement is nothing

more than a conclusory assertion and is insufficient for a reasonable

jury to infer that USAD intended to commit itself to performance of

its obligations under the 1997 Agreement for one year beyond the

express terms of that agreement. Moreover, LEAA’s president’s claim

is contradicted by LEAA’s concession that USAD unequivocally

6 LAW ENFORCEMENT ALLIANCE v. USA DIRECT
informed LEAA in mid-January 2001 that the 1997 Agreement had

expired, that a new written agreement was required, and that after

February 2001 all direct mail services would be performed on a prepaid basis. Without more, LEAA cannot sustain its burden of providing sufficient evidence of a triable issue of fact on its claim of an

implied in fact contract. 

Because LEAA has failed to provide sufficient evidence of a triable

issue of fact about whether there was any meeting of the minds

between it and USAD to extend the 1997 Agreement, the district

court did not err in granting summary judgment in favor of USAD

with respect to LEAA’s claim alleging breach of an implied in fact

contract. 

B.

LEAA next challenges the district court’s grant of summary judgment in favor of USAD with respect to USAD’s claim for payment

of seven unpaid invoices. Regarding six of the invoices (invoice numbers 6256, 6660, 6736, 6901, 6736-1, and 6441 (totaling

$106,418.42)), there is no dispute that LEAA requested the services,

that USAD provided the documented direct mail services to LEAA,

and that LEAA accepted the services. LEAA argues that it does not

owe USAD the outstanding balance on the invoices because, under

the 1997 Agreement, USAD’s invoices were to be paid out of money

in the escrow account, and when the invoices were received, there

was insufficient money in the escrow account to pay the invoices after

paying LEAA’s guaranteed $25,000 per month. The 1997 Agreement,

however, did not apply to the disputed invoices because the 1997

Agreement expired by September 30, 2000, and the disputed invoices

were all received after that date.5 Moreover, as discussed in Section

II.A above, there was no implied in fact contract that included the

5The 1997 Agreement expired by its express terms in September 2000,

and nothing therein stated that any contract created under the 1997

Agreement would continue to be controlled by its terms after the agreement expired. Thus, because all the invoices at issue were received after

the 1997 Agreement had expired, payment of the invoices is not controlled by the 1997 Agreement and need not come out of the escrow

account. 

LAW ENFORCEMENT ALLIANCE v. USA DIRECT 7
terms of the 1997 Agreement. Accordingly, we affirm the district

court’s grant of summary judgment regarding invoices 6256, 6660,

6736, 6901, 6736-1, and 6441 requiring payment of $106,418.42 in

damages. 

Regarding the remaining unpaid invoice, invoice number 7650,

LEAA maintains that, via email, it and USAD had previously agreed

to a flat fee of $13,119.09 for the entire project, to be paid up front,

and that it never agreed to pay anything above that fee. By email,

LEAA requested "a bottom line, hard number total for the entire

package" and inquired whether "$13,119.09 [would] get this package

out the door . . ., as promised, without any ‘additional charges’ being

assessed." (J.A. at 37-38.) In reply, USAD agreed that $13,119.09

would "get your package out the door" and explicitly stated, "No, to

any additional charges, unless you request additional [data processing] work after the fact." (J.A. at 37.) LEAA then paid USAD

$13,119.09; there is no evidence that LEAA requested any additional

data processing work. USAD, however, characterizes its email as

merely a cost estimate and claims that in order to be fully compensated for the actual cost of the project, USAD is entitled to an additional $877.04 due to the difference between the number of pieces

covered in the original quotation and the number of pieces reflected

in the final invoice. 

Viewing the evidence in the light most favorable to LEAA, as we

must, LEAA has provided sufficient evidence for a jury to find that

the parties formed a contract whereby USAD agreed to perform the

project in exchange for $13,119.09, to be paid up front. See Marefield

Meadows, 427 S.E.2d at 366 ("This acceptance was unqualified and

introduced no new terms. Thus, it meets the legal requirements for the

creation of a contract through letters."). Accordingly, there is a genuine issue of material fact as to whether LEAA owes USAD any additional amount on invoice 7650, and the district court erred in granting

summary judgment in favor of USAD with respect to that invoice. We

reverse the district court’s grant of summary judgment on this invoice

and remand for further proceedings. 

C.

LEAA next challenges the district court’s grant of summary judgment in favor of USAD with respect to USAD’s claim for $19,375 in

8 LAW ENFORCEMENT ALLIANCE v. USA DIRECT
finance charges calculated on the unpaid invoices. As we reversed the

district court’s grant of summary judgment on invoice 7650, we

reverse the grant of summary judgment on the finance charges for

invoice 7650 as well. 

With regard to the remaining six invoices, the district court granted

summary judgment in favor of USAD because the invoices at issue

explicitly stated, "NET DUE UPON RECEIPT," and noted that "[a]

finance charge of 1.5% per month (18% annually) will be applied to

all balances outstanding past the stated credit terms." (J.A. at 133-43.)

USAD presented these invoices to LEAA after the services were performed. Nothing on the face of the invoices demonstrates that LEAA

accepted the finance charge term, and USAD has presented no other

evidence of acceptance. Accordingly, these invoices are insufficient

to sustain USAD’s burden of proof on LEAA’s liability for finance

charges. In reviewing the grant of summary judgment, however, we

are not confined to the grounds relied on by the district court; we may

affirm on any legal basis supported by the record. Bryant v. Bell

Atlantic Md., Inc., 288 F.3d 124, 132 (4th Cir. 2002). 

USAD submitted evidence with respect to invoices 6256, 6660,

6736, 6901, and 6736-16 that, prior to performing the services, USAD

provided cost estimations to LEAA, which were subsequently

approved by LEAA, that included a finance charge term stating: "Payment: Payment shall be based upon credit and terms approved by

U.S.A. Direct, Inc. A finance charge of eighteen percent (18%) annually shall be imposed upon all overdue accounts." (J.A. at 147, 149,

151, 155, 157, 161, 165, 168, 172.) LEAA argues that, notwithstanding this language, the parties understood that no finance charges

would apply. LEAA supports this claim by pointing to evidence in the

record that demonstrates that finance charges were not applied under

the 1997 Agreement and that when such finance charges appeared,

USAD instructed LEAA to ignore them. The invoices at issue in this

6

Invoices 6736 and 6736-1 are for services performed with regard to

the same cost estimate. Invoice 6736-1 was merely a supplement to 6736

to charge for postage that was not reflected in invoice 6736. Because

LEAA approved a cost estimation for this job, LEAA agreed to finance

charges for the job, even though USAD chose to submit a separate

invoice for the insufficient postage. 

LAW ENFORCEMENT ALLIANCE v. USA DIRECT 9
appeal, however, were not governed by the terms of the 1997 Agreement. Further, evidence of how the parties dealt with finance charges

under their previous contract cannot be used to contradict the express

terms of the contract created by LEAA’s acceptance of the cost estimations. Course of dealing evidence, including evidence of course of

performance under a prior contract,7 may not be used where it is

7

In Virginia, "course of dealing is a sequence of . . . conduct between

the parties" prior to the formation of a contract, Va. Code Ann. § 8.1-

205(1) (Michie 2001), while "course of performance" deals with actions

between the parties after the formation of a contract, Va. Code Ann.

§ 8.2-208(1). Course of performance evidence from a prior contract is,

logically, course of dealing evidence for a subsequent contract. In other

words, the same actions might be a course of dealing for one contract

and, at the same time, be a course of performance for another contract.

In this case, how USAD and LEAA dealt with invoices under the 1997

Agreement would be course of performance evidence with regard to

interpretation of the 1997 Agreement because the actions took place after

USAD and LEAA entered into the 1997 Agreement and during the

course of that agreement. The disputed invoices, however, were not governed by the 1997 Agreement. Any actions taken under the 1997 Agreement would be actions taken prior to the formation of any contract

involving the disputed invoices and would be course of dealing evidence

with regard to interpretation of the disputed invoices. As the express

terms are inconsistent with the course of dealing evidence, the course of

dealing evidence is excluded. See Columbia Nitrogen Corp. v. Royster

Co., 451 F.2d 3, 8-9 (4th Cir. 1971). 

Although course of dealing and course of performance evidence only

applies to the sale of goods under the Uniform Commercial Code, these

provisions were enacted in Virginia in Article 1, the General Provisions.

Accordingly, course of dealing and course of performance evidence is

not limited merely to contracts for the sale of goods, but extends to all

commercial contracts. See Chas. H. Tompkins Co. v. Lumbermens Mut.

Cas. Co., 732 F. Supp. 1368, 1374 n.7 (E.D. Va. 1990). Moreover, the

Supreme Court of Virginia has cited an Article 2 provision regarding

these concepts in a case involving a service contract. See Doswell Ltd.

P’ship v. Virginia Elec. and Power Co., 468 S.E.2d 84, 90 (Va. 1996)

("Evidence that contract phrases or terms have acquired, by custom in

the locality, or by usage of the trade, a peculiar meaning not attached to

them in their ordinary use is admissible even though the phrases or terms

themselves are unambiguous. . . . See Code § 8.2-202(a) (terms in commercial sales agreements may be explained or supplemented by course

of dealing or usage of trade evidence)."). 

10 LAW ENFORCEMENT ALLIANCE v. USA DIRECT
inconsistent with express terms of a contract. See Va. Code Ann.

§ 8.1-205(4) (Michie 2001) ("The express terms of an agreement and

an applicable course of dealing or usage of trade shall be construed

wherever reasonable as consistent with each other; but when such

construction is unreasonable express terms control both course of

dealing and usage of trade."); Columbia Nitrogen Corp. v. Royster

Co., 451 F.2d 3, 9 (4th Cir. 1971) ("[E]vidence of usage of trade and

course of dealing should be excluded whenever it cannot be reasonably construed as consistent with the terms of the contract."). Because

USAD has presented uncontroverted evidence of a binding contract,

namely, that it offered services to LEAA under cost estimations that

included a finance charge term for invoices 6256, 6660, 6736, 6901,

and 6736-1, that LEAA accepted and approved these cost estimations,

and that USAD performed the services, the district court properly

granted summary judgment in favor of USAD regarding these

invoices. 

With respect to invoice 6441, USAD has not put into evidence cost

estimations approved by LEAA before the services were provided8

and relies on the 1995 Credit Application and the invoices themselves

to show that LEAA owes the finance charge. As discussed above, the

finance charge term in the invoices is insufficient to support summary

judgment for USAD. Although LEAA did agree to the 1995 Credit

Application before USAD provided the services in the invoices at

issue, and the 1995 Credit Application has not expired, LEAA has

presented course of performance evidence9 that USAD never claimed

finance charges from LEAA for outstanding balances. Accordingly,

there is a material question of fact as to whether USAD has waived

its right to rely on the finance charge term in the 1995 Credit Application. See John H. Maclin Peanut Co. v. Pretlow & Co., 11 S.E.2d 607,

8Although USAD claimed at oral argument that there was a cost estimation for Invoice Number 6441, it did not submit any evidence of a cost

estimation approved by LEAA in the district court or in this court. 

9As discussed supra note 7, course of performance evidence is evidence of actions that the parties took after the formation of a contract.

Where, subsequent to the formation of a contract, the parties have disregarded certain terms in the contract, the parties may have waived the

right to enforce that contractual term. See John H. Maclin Peanut Co. v.

Pretlow & Co., 11 S.E.2d 607, 611 (Va. 1940). 

LAW ENFORCEMENT ALLIANCE v. USA DIRECT 11
611 (Va. 1940) (observing that whether parties have deliberately and

mutually disregarded plain terms of a contract, and thus waived contractual rights, is generally a jury question). 

Accordingly, we affirm the district court’s grant of summary judgment in favor of USAD with respect to USAD’s claim to finance

charges in connection with invoices 6256, 6660, 6736, 6901, and

6736-1. We reverse the district court’s grant of summary judgment in

favor of USAD with respect to USAD’s claim to finance charges in

connection with invoices 6441, and 7650 and remand for further proceedings with respect to such claims. 

III.

LEAA also challenges the district court’s overruling of its objections to the discovery sanctions imposed upon it by the magistrate

judge. We review the grant of discovery sanctions under Rule 37 of

the Federal Rules of Civil Procedure for abuse of discretion. Anderson v. Found. for Advancement, Educ. and Employment of Am. Indians, 155 F.3d 500, 504 (4th Cir. 1998). The magistrate judge granted

USAD’s motion for discovery sanctions against LEAA, pursuant to

Rule 37(b), for LEAA’s failure to comply with Rule 26(a)(1)(B) of

the Federal Rules of Civil Procedure, which requires timely disclosure

of documents that the disclosing party may use in support of its

claims or defenses. LEAA failed to produce invoices 6256, 6441,

6660, and 6736, which had been approved for payment by LEAA’s

Director of Marketing, until after the deadline for the exchange of

mandatory disclosures under the court’s scheduling order, after the

close of all discovery, after the filing of motions for summary judgment, and only two weeks before trial. 

The magistrate judge found that LEAA "used" these invoices in its

motion for partial summary judgment and its response to USAD’s

motion for partial summary judgment by claiming that "[n]one of the

seven (7) invoices . . . are signed or initialed by any agent or representative of LEAA."10 (J.A. at 243.) The magistrate judge also found that,

10At oral argument, LEAA admitted that the four invoices were in fact

signed or initialed by an LEAA representative and that its claim otherwise in its partial summary judgment motion was incorrect. 

12 LAW ENFORCEMENT ALLIANCE v. USA DIRECT
by the time the four invoices were produced, USAD "[h]ad already

expended considerable time and effort conducting discovery on the

issue of [LEAA’s] acceptance for payment of these invoices." (J.A.

at 243.) Furthermore, USAD submitted a sworn declaration showing

that $6,981.50 in counsel fees and costs were directly attributable to

LEAA’s failure to produce the four invoices, the magistrate judge

expressly found that "these fees are reasonable under the circumstances, and that they were in fact incurred due to [LEAA’s] failure"

to timely disclose the four invoices. (J.A. at 243-44.) The magistrate

judge then summarized his findings: "(1) that [LEAA’s] conduct is

inexcusable even if it does not rise to the level of bad faith; (2) that

[LEAA] caused considerable prejudice to [USAD]; (3) that the need

for deterrence of this sort of non-compliance with the rules is great;

and (4) that less drastic sanctions would not have been effective."

(J.A. at 244.) The district court reviewed the evidence, overruled

LEAA’s objections, and summarily affirmed the magistrate judge’s

imposition of sanctions.11

LEAA makes several arguments that the district court erred. LEAA

first contends that USAD did not demonstrate that LEAA acted in bad

faith with respect to its late disclosure of the four invoices. Under

Anderson, we recognized that the "Fourth Circuit has developed a

four-part test for a district court to use when determining what sanctions to impose under Rule 37." Anderson, 155 F.3d at 504. A district

court must determine: 

(1) whether the non-complying party acted in bad faith, (2)

the amount of prejudice that noncompliance caused the

adversary, (3) the need for deterrence of the particular sort

of non-compliance, and (4) whether less drastic sanctions

would have been effective. 

Anderson, 155 F.3d at 504 (citing Wilson v. Volkswagen of Am., Inc.,

561 F.2d 494, 503-05 (4th Cir. 1977)). LEAA claims that a district

court necessarily must find all four Anderson factors to grant sanctions and that USAD failed to show the first factor, "bad faith,"

because the magistrate judge only stated that LEAA’s "conduct is

11The district court reduced the sanction award to $6,169.00 based on

USAD’s agreement to reduce its claim by 3.25 hours. 

LAW ENFORCEMENT ALLIANCE v. USA DIRECT 13
inexcusable even if it does not rise to the level of bad faith." (J.A. at

244.) 

LEAA misreads Anderson. Anderson does not hold that a district

court must find that a party acted in bad faith, it merely holds that in

determining what sanctions are appropriate, a district court must consider "whether" the party acted in bad faith. Id. at 504. Where a district court determines that there was no bad faith, that determination

will likely be reflected in a less severe sanction. Anderson does not

require a finding of bad faith before discovery sanctions can be

awarded and to hold otherwise would be at odds with Rule 37(c)(1)’s

plain language, which contains no such requirement. 

LEAA next makes a semantic argument that it never actually

"used" the invoices and did not intend to do so, and thus was not

required to disclose them under Rule 26(a)(1)(B), which only requires

disclosure of all documents or other tangible items that a party "may

use to support its claim or defenses." The concept of "use," however,

is defined broadly: 

"Use" includes any use at a pretrial conference, to support

a motion, or at trial. The disclosure obligation is also triggered by intended use in discovery, apart from use to

respond to a discovery request; use of a document to question a witness during a deposition is a common example.

The disclosure obligation attaches both to witnesses and

documents a party intends to use and also to witnesses and

to documents the party intends to use if—in the language of

Rule 26(a)(3)—"the need arises." 

Fed. R. Civ. P. 26 advisory committee notes to 2000 Amendment.

Although LEAA did not actually submit the invoices with their partial

motion for summary judgment, LEAA "used" the invoices when it

represented that "[n]one of the seven (7) invoices . . . are signed or

initialed by any agent or representative of LEAA." (J.A. at 243.) Also,

to prove this defense at trial, LEAA would have had to "use" the document as evidence at trial. Thus, the invoices are something that

LEAA (1) used in its motion for partial summary judgment and (2)

used "to support its claim or defenses." Accordingly, the district court

did not abuse its discretion in finding that LEAA used the invoices.

14 LAW ENFORCEMENT ALLIANCE v. USA DIRECT
LEAA also contends that there is no evidence that USAD’s

claimed expenses were caused by LEAA’s failure to disclose. The

magistrate judge’s decision was properly based on USAD’s attorney

time sheets, deposition receipts, and its sworn affidavit in support of

USAD’s motion for sanctions. LEAA provided no evidence to the

contrary. 

Because LEAA’s legal arguments are unavailing, the district court

did not abuse its discretion by upholding the magistrate judge’s award

of discovery sanctions in favor of USAD. 

IV.

For the foregoing reasons, (1) the district court’s grant of summary

judgment in favor of USAD with respect to LEAA’s breach of an

implied in fact contract claim is affirmed; (2) the district court’s grant

of summary judgment in favor of USAD with respect to USAD’s

claim for payment under invoices 6256, 6441, 6660, 6736, 6736-1,

and 6901 is affirmed; (3) the district court’s grant of summary judgment in favor of USAD with respect to USAD’s claim for payment

under invoice 7650 is reversed and the merits of the claim should be

considered on remand; (4) the district court’s grant of summary judgment in favor of USAD with respect to USAD’s claim for finance

charges in connection with invoices 6256, 6660, 6736, 6901, and

6736-1 is affirmed; (5) the district court’s grant of summary judgment

in favor of USAD with respect to USAD’s claim for finance charges

in connection with invoices 6441 and 7650 is reversed and the merits

of the claim should be considered on remand; and (6) the award of

discovery sanctions is affirmed. We grant LEAA’s motion to supplement the appendix with the stipulation that USAD may also file the

additional pages that it has identified.

AFFIRMED IN PART, REVERSED IN PART,

AND REMANDED

LAW ENFORCEMENT ALLIANCE v. USA DIRECT 15