Opinion ID: 2763621
Heading Depth: 4
Heading Rank: 1

Heading: Request for Admission 3

Text: Plaintiffs asked Efacts to “[a]dmit you accessed the online bidding system provided for Yoder & Frey’s February, 2010 Florida auction using the username of Allied Erecting & Dismantling, Inc. (Buyer Number 102703).” [R. 131-2, Reqs. for Admiss.] “You” was defined as “Equimentfacts, LLC, its representatives, agents, officers, directors, and employees, including, but not limited to, Larry Garafola.” [Id.] Efacts denied this, but at trial, one of the company’s employees admitted that she created a bidding account using the name of Allied Erecting’s owner. Garafola admitted that he knew that his employee accessed Plaintiffs’ auction using Allied Erecting’s credentials, but explained that he denied the request for admission because he did not believe his employee’s actions were attributable to Efacts. More specifically, he believed that because the employee’s conduct was against company policy her conduct could not be imputed to the company. In reviewing the motion for sanctions, the district court considered whether Efacts “had reasonable grounds to believe it would prevail by convincing the jury it had no vicarious liability for [its employee’s] actions.” Yoder & Frey, 2013 WL 6180696, at  (citing Fed. R. Civ. P. 37(c)(2)(C)). Having previously determined that Florida law governed this claim, the court found that the employee’s conduct was within the scope of her employment because under Florida law “conduct may be within the ‘scope of employment’ even if it is unauthorized, if it is of the same general nature as, or sufficiently similar to, authorized conduct.” Id. (quoting Padgett v. Sch. Bd. of Escambia Cnty., 395 So.2d 584, 586 (Fla. Dist. Ct. App. 1981)). Accordingly, the district court concluded that Efacts did not have reasonable grounds to believe that it would prevail on this issue. Before awarding sanctions, the district court noted its “hesitat[ion] to sanction a party for failing to admit a question that is a pillar of the case’s ultimate issue.” Id. at . The court went No. 14-3002 Yoder & Frey, et al. v. EquipmentFacts Page 12 on to explain that “[w]here a party has a reasonable belief it may prevail,” courts should not sanction that party in the event it does not prevail. Id. However, because Efacts did not have reasonable grounds to believe it might prevail, the district court awarded nominal sanctions and costs in order to “effect the principle of accurate admission responses without compromising the principle of allowing juries to decide reasonably contestable issues.” Id. Efacts does not assign error to the district court’s application of Florida law; rather, before this Court, it argues that because the jury had to decide the contested issue of when Garafola became aware that an employee accessed Plaintiffs’ auction without authorization, it could deny the request in good faith.6 However, Efacts did not make this timing argument to the district court and, as a result, has forfeited its right to have argument addressed on appeal. See Poplar Creek Dev. Co. v. Chesapeake Appalachia, L.L.C., 636 F.3d 235, 242 n.5 (6th Cir. 2011). The district court held that Efacts did not have reasonable grounds to believe that it could convince the jury that it was not liable for its employee’s actions. Because “you” in the request for admission included “employees,” and Florida law allows for vicarious liability for unauthorized conduct that occurs within the scope of employment, the district court did not abuse its discretion in awarding sanctions for Efacts’ failure to admit Request 3.7 Indeed, Rule 37 requires the district court to impose sanctions if the non-moving party’s conduct does not fall into one of the subsection (c)(2) safe harbors. B. Requests for Admission 10, 11, 12 and 13 Requests 10 through 13 asked Efacts to admit that four internet-service-provider-logs documenting who leased an IP address on given date and at a specific time were authentic business records as defined by Federal Rules of Evidence 803(6) and 902(11). Efacts stated that it was unfamiliar with the business records of the ISPs and without knowledge or information sufficient to admit or deny the requests. Plaintiffs deposed three ISP representatives and called the fourth as a witness at trial to authenticate the records. The district court denied Efacts’ 6 Plaintiffs argued that Garafola knew of the employee’s conduct at the time of access, while Efacts argued that Garafola only learned of it after the lawsuit was filed. 7 Efacts does not challenge the district court’s implicit finding that the employee’s conduct was within the scope of her employment. Nonetheless, we take this opportunity to make clear that we glean nothing in the record that makes us believe this finding was erroneous. No. 14-3002 Yoder & Frey, et al. v. EquipmentFacts Page 13 motion in limine to bar the records as hearsay and overruled Efacts’ objections at trial when the records were introduced. “The answering party may assert lack of knowledge or information as a reason for failing to admit or deny only if the party states that it has made reasonable inquiry and that the information it knows or can readily obtain is insufficient to enable it to admit or deny.” Fed. R. Civ. P. 36(a)(4). Before the district court, Efacts did not claim it made a reasonable inquiry into the records’ authenticity; instead, it argued that it was unable to know the authenticity of another company’s records. However, eschewing form over substance, the district court looked beyond the language of the response to determine whether Efacts actually inquired into the authenticity of the records. The court found that during the entirety of the litigation, Efacts never argued that it made the required inquiry and only pointed to perceived shortcomings in Plaintiffs’ authentication efforts. Accordingly, the court concluded that Efacts was unable to demonstrate that it had a reasonable ground to believe it could establish that the documents were not authentic. Because Plaintiffs prevailed in showing that the records were admissible, and Efacts’ failure to admit was not protected by any Rule 37(c)(2) safe harbor, the district court awarded sanctions. The district court’s finding that Efacts never stated it made a reasonable inquiry and that it was unable to show that it actually inquired is not clearly erroneous. Moreover, Efacts’ assertion that “even if [it] had admitted the authenticity of the ISP documents, Plaintiffs would still have been required to prepare for and put on at least a portion of the same or similar testimony” from the ISP representatives is meritless. [Appellant’s Br., § IV.C.]; see United States v. Johnson, 831 F.2d 124, 129 (6th Cir. 1987) (pointing out that hearsay objections could be overcome via the business records exception where the objecting party stipulated prior to trial that the documents at issue were authentic business records). Therefore, we conclude that the district court did not abuse its discretion in awarding sanctions.