Opinion ID: 770612
Heading Depth: 2
Heading Rank: 2

Heading: District Court's Final Order of December 16, 1999

Text: 127 Appellants next contend that the district court erred in affirming the magistrate judge's letter opinion and order entered June 30, 1999, which granted appellees' motion for discovery sanctions against appellants pursuant to Rule 37(b) and (d). 15 As we previously mentioned, the magistrate judge agreed with appellees' argument that Berger's conduct warranted a sanction in the form of precluding appellants from asserting a position and introducing evidence contrary to the position Berger asserted during his deposition. In addition, the magistrate judge concluded that Berger's lack of preparedness at his deposition justified the imposition of monetary sanctions pursuant to Rule 37(d) in the form of costs and attorney's fees associated with taking the deposition and bringing the sanctions motion before the court. App. at 22a. The magistrate judge clearly set forth the factual and legal basis for his ruling, relying primarily on the Court of Appeals for the Fifth Circuit's decision in Resolution Trust Corp. v. Southern Union Co., 985 F.2d 196 (5th Cir. 1993) (Southern Union): 128 Here, Berger was not completely prepared on any occasion for which he sat for a deposition. Further, his lack of preparation cannot be a mere oversight but is, instead, a clear demonstration of bad faith. This is obvious from Berger's repeated denial of any knowledge of his status as a 30(b)(6) witness despite being present at the deposition and being asked each and every time he appeared if he had knowledge of his status. Further, Berger, as did the plaintiffs' witness in Resolution Trust Corp., even denied knowledge of documents which he himself had signed, claiming that he had no recollection of such documents despite acknowledging that he normally did not sign anything that he did not read first. These infractions would not be so detrimental if Berger were no so consistent with his apparent incompetence and lack of cooperation. Had he taken the time to prepare in the slightest as Rule 30(b)(6) requires, he might have been fully prepared for at least one deposition. Additionally, Berger's actions are magnified by his status as a member of the Bar. 129 App. at 21a. 130 In affirming the magistrate judge's order, the district court provided its reasons on the record: 131 I read the record. It is appalling. It is appalling. 132 [Berger] did nothing except show his face only under the threat of court orders. When he showed up, he knew he was a 30(b)(6) witness and, notwithstanding the fact that he knew he was a 30(b)(6) witness, he refused to answer questions in an intelligent way. He refused to prepare, as you are required to prepare under 30(b)(6), to intelligently answer questions and just literally thumbed his nose at the defendants and, frankly, at the Court. 133 . . . . 134 I'm satisfied, based upon my review of the record--and I defy anyone to look at the record here which was created by Mr. Berger--that the actions taken by [the magistrate judge] were well within his discretion and do not constitute either an abuse of discretion or are they contrary to law or shocking to the conscience of the Court. 135 One, in order to come to that conclusion, one must live in the shoes of [the magistrate judge] in trying to conduct orderly discovery in this matter. 136 One must review meticulously the record of noncompliance by Mr. Berger in this matter. 137 [The magistrate judge] did not issue this opinion lightly. [The magistrate judge] was fully cognizant of the totality of the facts surrounding this matter, which border upon almost conscious disregard of the Court and the court rules. . . . 138 Affirmed. 139 App. at 836a, 843a-44a. 140 Appellants make two arguments in support of their request to vacate the monetary sanctions order. 16 They first claim that the district court abused its discretion in affirming the magistrate judge's monetary sanctions because the court misunderstood the requirements for imposing sanctions pursuant to Rule 37(d). They assert that Rule 37 required as a prerequisite to imposing a monetary sanction that the court first issue an order compelling appellants to supply the requested discovery responses, and then find that they failed to do so. See Reply Br. at 29. They further claim that pursuant to Rule 37(d), a party making a motion based upon an alleged violation of Rule 37(d) must certify that the movant has in good faith conferred or attempted to confer with the party failing to answer or respond in an effort to obtain such answer or response without court action, but that there was no such good faith effort by appellees to resolve the dispute without court action. Reply Br. at 30 (internal quotation marks omitted). 141 Finally, they rely on the fact that Rule 37(d) states that sanctions may be imposed when a party, inter alia, fails . . . to appear before the officer who is to take the deposition, after being served with a proper notice. Here, they argue that we should apply the fails to appear language literally, and that sanctions were inappropriate in this case because Berger appeared for his deposition after the magistrate judge's October 15, 1998 order and testified under oath for more than seventeen hours. Br. at 59-60. In support of their literal reading of Rule 37(d), they rely primarily on the Court of Appeals for the First Circuit's opinion in R.W. International Corp. v. Welsh Foods, Inc., 937 F.2d 11 (1st Cir. 1991), which stated that Rule 37(d) sanctions apply only when a deponent `literally fails to show up for a deposition session.'  Id. at 15 n.2 (quoting Salahuddin v. Harris, 782 F.2d 1127, 1131 (2d Cir. 1986)). 142 Their second argument is based on their interpretation of Berger's behavior during his deposition. They claim that even if we agree with the magistrate judge's finding that Rule 37(d) could support the imposition of sanctions when a Rule 30(b)(6) witness provides inadequate and evasive answers, the record demonstrates that Berger's deposition did not present a situation warranting sanctions. They claim that [a] fair examination of the transcript of Mr. Berger's 570-page deposition confirms that Mr. Berger testified fully and in good faith in response to Defendants' questioning. In any event, they maintain thatany `violation' of Rule 30(b)(6) which might be said to have existed was minimal, and indeed, paled in comparison with the extraordinarily broad discovery obtained by Defendants in this matter. Br. at 63. 143 We are not persuaded by either contention. Beginning with appellants' interpretation of the language of Rule 37(d), 17 they simply are incorrect that the magistrate judge committed an error of law in awarding a monetary sanction to appellees. Initially, we point out that unlike 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. See Al Barnett & Son, Inc. v. Outboard Marine Corp., 611 F.2d 32, 35 (3d Cir. 1979) ([A] direct order by the Court, as Rule 37(a) and (b) requires, is not a necessary predicate to imposing penalties under Rule 37(d).), repudiated on other grounds, Alexander v. Gino's Inc., 621 F.2d 71 (3d Cir. 1980); compare Fed. R. Civ. P. 37(b)(2) (If a party . . . or a person designated under Rule 30(b)(6) . . . fails to obey an order to provide or permit discovery, including an order made under subdivision (a) of this rule . . . .) with Fed. R. Civ. P. 37(d) (stating that if the party fails, inter alia, to appear for a deposition, the court . . . may make such orders in regard to the failure as are just). Moreover, while appellants claim that subdivision (d) requires the party seeking sanctions to certify in their motion papers that they conferred or attempted to confer in good faith with the party failing to answer or respond in an effort to avoid court intervention, subdivision (d) explicitly only requires such a certification where the motion specifies a failure under clause (2) or (3) of this subdivision. Fed. R. Civ. P. 37(d). Here, appellees made the motion for sanctions based on clause (1) of subdivision (d), which deals with a party's failure (1) to appear before the officer who is to take the deposition. Id. 144 In addition, while we recognize that the court's statement in Welsh Foods supports appellants' interpretation of the language of Rule 37(d)--namely that it requires an actual no show to satisfy the fails to appear requirement in subdivision (1)--they apparently have overlooked the circumstance that the magistrate judge's decision relied on Southern Union, 985 F.2d 196. Importantly, in Southern Union the Court of Appeals for the Fifth Circuit rejected a literal interpretation of Rule 37(d) in situations where the uncooperative deponent is a party's Rule 30(b)(6) designated witness. 145 In Southern Union the defendant Southern Union Co. (Southern Union) served notice on the RTC that it intended to depose it pursuant to Rule 30(b)(6), and set forth with specificity ten discrete topics with which the deponent was to be familiar. After the RTC designated two individuals as Rule 30(b)(6) deponents, Southern Union's representatives traveled from Washington, D.C. to Dallas, Texas, to conduct the depositions. Neither representative, however, possessed any knowledge relevant to the matters designated in the Rule 30(b)(6) notice. Consequently, Southern Union moved for sanctions, and the district court granted the motion, awarding costs and fees incurred in deposing the RTC's two witnesses and in identifying ultimately the proper deponent with knowledge of the relevant facts. See id. at 196-97. 146 Relying upon the Court of Appeals for the Second Circuit's opinion in Salahuddin, a case cited subsequently in Welsh Foods, the RTC contended that sanctions pursuant to Rule 37(d) were not appropriate because both witnesses literally appeared for their depositions, albeit that neither was helpful or forthcoming with pertinent information. The Court of Appeals for the Fifth Circuit rejected that argument, reasoning: 147 Were we here faced with a case involving the deposition of a natural person we might be inclined to agree with the reading of Rule 37(d) by our Second Circuit colleagues [in Salahuddin]. The deposition of a corporation, however, poses a different problem, as reflected by Rule 30(b)(6). 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 to designate an available, knowledgeable, and readily identifiable witness, then the appearance is, for all practical purposes, no appearance at all. 148 In the instant case, RTC possessed documents that clearly identified [the eventual deponent] as having personal knowledge of the subject of the deposition. RTC did not furnish those documents or designate [that deponent] until after it had designated Perry and Wieting, obliged Southern Union's counsel to travel from Washington, D.C. to Dallas for a useless deposition, and been served with Southern Union's motion for sanctions. The finding that RTC did not make a meaningful effort to acquit its duty to designate an appropriate witness is manifest. The district court did not abuse its discretion in awarding fees and costs under Rule 37(d). 149 Id. at 197-98. 150 Following the reasoning in Southern Union, several courts similarly have read the phrase fails . . . to appear in Rule 37(d) pragmatically in light of the purposes of Rule 30(b)(6) and the parties' obligations thereunder. See, e.g., Starlight Int'l Inc. v. Herlihy, 186 F.R.D. 626, 639 (D. Kan. 1999) (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.); The Bank of New York v. Meridien Biao Bank Tanzania Ltd., 171 F.R.D. 135, 151 (S.D.N.Y. 1997) (`Producing an unprepared witness is tantamount to a failure to appear.') (quoting United States v. Taylor, 166 F.R.D. 356, 363 (M.D.N.C. 1996)); Taylor, 166 F.R.D. at 363 ([I]nadequate preparation of a Rule 30(b)(6) designee can be sanctioned based on the lack of good faith, prejudice to the opposing side, and disruption of the proceedings.); Zappia Middle East Constr. Co. v. The Emirate of Abu Dhabi, No. 94-1942, 1995 WL 686715, at  (S.D.N.Y. Nov. 17, 1995) (agreeing with rule announced in Southern Union that providing a wholly inadequate witness may amount to non-appearance under Rule 30(b)(6), but finding that sanctions were not warranted in the circumstances of that case); Municipal Subdistrict, Northern Colo. Water Conservancy District v. OXY USA, Inc. , 990 P.2d 701, 710 (Colo. 1999) (en banc) (following Southern Union, 985 F.2d at 197, and holding that trial court may issue sanctions for failure to appear under Col. R. Civ. P. 37(d)-- the state's analogue to Fed. R. Civ. P. 37(d)--when a corporation designates a deponent who appears but is unable to answer all the questions specified in the Col. R. Civ. P. 30(b)(6) notice); see also, e.g., Turner v. Hudson Transit Lines, Inc., 142 F.R.D. 68, 78-79 (S.D.N.Y. 1991) ([A] party that fails to provide witnesses knowledgeable in the areas requested in a Rule 30(b)(6) notice is likewise subject to sanctions.); Thomas v. Hoffman-LaRoche, Inc., 126 F.R.D. 522, 525 (N.D. Miss. 1989) (Sanctions are appropriate when a party fails to comply with a request under Rule 30(b)(6) to provide a knowledgeable deponent to testify on behalf of the organization.); see generally Boland Marine & Mfg. Co. v. M/V Bright Field, No. 97-3097, 1999 WL 280451, at  (E.D. La. May 3, 1999) (acknowledging the rule announced in Southern Union but finding that deponent was prepared adequately and that sanctions were not warranted). 151 We agree with the distinction the Court of Appeals drew in Southern Union, and find its analysis persuasive. 18 In reality if a Rule 30(b)(6) witness is unable to give useful information he is no more present for the deposition than would be a deponent who physically appears for the deposition but sleeps through it. Indeed, we believe that the purpose behind Rule 30(b)(6) undoubtedly is frustrated in the situation in which a corporate party produces a witness who is unable and/or unwilling to provide the necessary factual information on the entity's behalf. See generally Fed. R. Civ. P. 30 advisory committee's notes (stating that the procedure outlined in subdivision (b)(6) should be viewed as an added facility for discovery and would curb the `bandying' by which officers or managing agents of a corporation are deposed in turn but each disclaims knowledge of relevant facts). For courts to permit litigants to disregard the responsibilities that attend the conduct of litigation would be tantamount to `encouraging dilatory tactics.'  Al Barnett & Son, Inc., 611 F.2d at 35 (quoting Cine Forty-Second Street Theatre v. Allied Artists Pictures Corp., 602 F.2d 1062, 1068 (2d Cir. 1979)). Thus, we 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). See Taylor, 166 F.R.D. at 363. Accordingly, we conclude that the district court did not commit an error of law in affirming the magistrate judge's sanctions order entered pursuant to Rule 37(d), as the magistrate correctly applied the Court of Appeals for the Fifth Circuit's construction, which we approve, of the phrase fails . . . to appear in Southern Union. 152 We reject appellants' final contention that Berger's responses during his deposition did not support the district court's finding that he failed to cooperate with appellees' attorneys, and that his conduct was tantamount to a failure to appear that warranted sanctions under Rule 37(d). To the contrary, our review of Berger's deposition testimony in its entirety confirms the observations of both the magistrate judge and the district court on this point. Indeed, throughout his lengthy deposition, Berger failed to offer meaningful testimony about most, if not all, of the items specified in the notice of deposition. While we need not recite every instance in which Berger's testimony was incomplete and unhelpful on the specified topics, we believe that two examples of his uncooperative attitude and his flagrant disregard for his obligation as a Rule 30(b)(6) witness amply illustrate our point. 153 First, when Berger was asked about the Agreement he signed between USLR and Essex, he stated that he had no recollection of (1) seeing or signing the Agreement, (2) negotiating the Agreement (or who participated in its negotiation), (3) drafting the various provisions in the Agreement (or who participated in its drafting), or (4) the circumstances surrounding the purchase of the Property, i.e., if he attended the closing and where it occurred, even though he admitted that he was personally involved in the purchase of the Property and probably negotiated the contract. See app. at 525a. Second, when asked about any and all cleanup costs appellants' incurred as a result of the contamination on the Property, Berger testified that he did not know: (1) whether appellants spent any money to cleanup hazardous waste; (2) whether appellants performed any environmental evaluation or investigation on the Property, whether they incurred costs in doing so, and whether there are any records that such tests were performed; (3) whether appellants hired ESI to perform consulting services for the Property, and if so, the dates and purposes for which appellants retained ESI; (4) whether ESI's billing statements in the record reflected work performed on the Property or other unrelated services; and (5) whether appellants performed any removal or remedial actions on the Property. App. at 521a, 523-25a, 544a-49a. 154 Obviously, as appellants' Rule 30(b)(6) witness, Berger should have been prepared to discuss these and other topics designated in the notice of deposition. Instead, he divulged as little information as possible in every area that appellees identified. Moreover, Berger's uncooperative attitude is demonstrated further by statements in which he claimed that he was unaware that he was appellants' designated Rule 30(b)(6) representative, did not know what the phrase Rule 30(b)(6) representative meant, and was not familiar with Rule 30(b)(6) or what it required him to do. App. at 513a-14a, 527a, 544a. He also admitted at one point that he did not recall whether he reviewed the notice of deposition prior to the date of the deposition, app. at 527a, and later stated clearly that he had not bothered to read it at all. App. at 610. Simply put, we find his professed ignorance on these points particularly unconvincing given that he obtained undergraduate and law degrees from prestigious universities and has been licensed to practice law since either [19]65 or [19]66. App. at 508a. 155 In any event, we believe that the magistrate judge's finding that Berger engaged in discovery abuses plainly is justified on this record. The magistrate judge had ample evidence of Berger's failure to cooperate, which in turn rendered his deposition a virtual non-event. Accordingly, we will affirm the monetary sanctions ordered pursuant to Rule 37(d).