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Alden v. Mid-Mesabi Assocs. Ltd. Pshp.: US District Court : DISCOVERY - attorney fees awarded as sanction for discovery failures

15
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
MARGE ALDEN d/b/a Croix
Management Company,
Plaintiff,
v.
MID-MESABI ASSOCIATES LIMITED
PARTNERSHIP, THE LOCKWOOD
GROUP, LLP, and JOSEPH A.
SHEPARD,
Defendants.
Civil No. 06-954 (JRT/RLE)
ORDER AFFIRMING
MAGISTRATE JUDGES ORDERS
Fred A. Reiter, FRED A. REITER & ASSOCIATES, 3109 Hennepin
Avenue South, Minneapolis, MN 55408, for plaintiff.
Charles J. Schoenwetter, Bard D. Borkon, and Roseann J. Bour,
BOWMAN AND BROOKE LLP, 150 South Fifth Street, Suite 3000,
Minneapolis, MN 55402, for defendants.
On January 2, 2008, United States Magistrate Judge Raymond L. Erickson issued
an order granting defendants motion to compel discovery, including production of
written communications between plaintiff and the United States Department of
Agriculture (USDA). Both plaintiff and defendants requested reconsideration of the
January 2, 2008 order, seeking clarification as to the scope of that ruling. The Magistrate
Judge subsequently issued an order dated February 25, 2008, granting defendants
request for reconsideration, denying plaintiffs request for reconsideration, and granting
defendants motion for sanctions against plaintiff in the amount of ,138. Before the
- 2 -
Court are plaintiffs objections to both the January 2, 2008 order and the February 25,
2008 order. For the reasons explained below, the Court overrules plaintiffs objections
and affirms the orders of the Magistrate Judge.
BACKGROUND1
Plaintiff Marge Alden contracted with Mid-Mesabi Associates Limited
Partnership, The Lockwood Group, LLP, and Joseph Sherwood (defendants) to provide
property management services at the Mesabi Woods Apartments, a residential housing
complex owned by defendants and located in Eveleth, Minnesota. Plaintiff brought this
diversity action against defendants for breach of contract, account stated, and unjust
enrichment, alleging that defendants refused to pay her for property management services
and failed to reimburse her for additional costs and expenses incurred during her
management of Mesabi Woods between July 1998 and August 2000. Defendants
asserted counterclaims including breach of contract, negligence, fraud/negligent
misrepresentation, and a claim for equitable accounting.
The parties have been mired in a series of protracted discovery disputes
throughout the course of pre-trial litigation, much of which has resulted from plaintiffs
ongoing refusal to produce requested discovery. The Magistrate Judge has granted no
fewer than three motions to compel plaintiffs production of relevant documents. In the
first such order, dated October 20, 2006, the Magistrate Judge noted that he was
1 The detailed procedural history of this case is set forth in the prior orders of the
Magistrate Judge, and is reproduced here to the extent necessary to resolve plaintiffs objections.
- 3 -
astounded that documents had not yet been produced by plaintiff, and stated that
sanctions would be imposed if it was determined that plaintiff was withholding
responsive documents from discovery.
The Magistrate Judge granted a second motion to compel on August 31, 2007,
finding that plaintiffs refusal to provide discovery was substantially impeding progress
in the case. The Magistrate Judge noted, for example, that plaintiff stated she had not
provided any deposition testimony in the last ten years, but that defendants later
discovered several cases in which plaintiff had in fact given deposition testimony.
Plaintiff continued to deny that she had provided deposition testimony until defendants
counsel confronted her with partial transcripts of her own testimony. Plaintiff also stated
in an affidavit that she had been required to pay 7.69 in connection with an audit by
the USDA, but later stated that in fact she had been required to pay ,235. Based on
this and other conduct, the Magistrate Judge granted defendants motion for sanctions,
with the amount of sanctions to be determined at a later date.
On January 2, 2008, the Magistrate Judge issued a Minute Order granting
defendants third motion to compel discovery, which sought, in part, the discovery of
written communications between plaintiff and the USDA regarding ongoing disputes
related to plaintiffs management of two USDA-subsidized apartment projects. The
Magistrate Judge rejected plaintiffs argument that the documents were protected by the
mediation privilege under Minnesota Statute 595.02, subd. 1(l), and ordered plaintiff
to produce any relevant communications between plaintiff and the USDA. The
Magistrate Judge further ordered plaintiff to produce a privilege log along with any
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objections to defendants discovery requests, stating plaintiffs grounds for the asserted
privilege.
Plaintiff filed objections to the January 2, 2008 order. Plaintiff characterized the
Magistrate Judges order as having determined that a mediation in fact occurred between
plaintiff and the USDA. Plaintiff then argued that the Magistrate Judge erroneously
concluded that the requested communications were not protected under the mediation
privilege set forth in Minn. Stat. 595.02, subd. 1(l). Plaintiff also objected to the
Magistrate Judges order that she produce a privilege log for claims of privilege. These
objections are now before the Court.
The parties also requested reconsideration of the Magistrate Judges order.
Defendants requested clarification of the scope of the privilege log to ensure that the log
encompasses all documents in this action for which the plaintiff claims privilege.
Plaintiff requested reconsideration of the Magistrate Judges determination that the
communications between plaintiff and the USDA were not protected by a mediation
privilege and were thus discoverable.
In an order dated February 25, 2008, the Magistrate Judge granted defendants
motion for reconsideration in part,2 finding that the required privilege log should
encompass all documents that the plaintiff claims are privileged in this litigation. The
Magistrate Judge denied plaintiffs request for reconsideration, rejecting plaintiffs
2 The Magistrate Judge denied defendants motion to the extent it sought an award of
attorneys fees associated with their third motion to compel, finding that plaintiffs mediation
privilege argument was not entirely frivolous.
- 5 -
characterization of the communications between plaintiff and the USDA as a
mediation.3 The Magistrate Judge further determined that, even if these
communications were part of a mediation, they were not protected by a mediation
privilege under Minn. Stat. 595.02, subd. 1(l). Finally, the Magistrate Judge awarded
defendants motion for sanctions in the amount of ,138.
Plaintiff has now filed objections to the Magistrate Judges February 25, 2008
order, arguing that the amount of sanctions awarded by the Magistrate Judge is excessive,
and further arguing that the Magistrate Judge erred in requiring the plaintiff to produce a
privilege log with respect to all claims of privilege. The Court now turns to plaintiffs
two sets of objections.
ANALYSIS
I. STANDARD OF REVIEW
The standard of review for an appeal of a magistrate judges order on a nondispositive
issue is extremely deferential. Reko v. Creative Promotions, Inc., 70 F. Supp.
2d 1005, 1007 (D. Minn. 1999). The Court will reverse the order only if it is clearly
erroneous or contrary to law. 28 U.S.C. 636(b)(1)(A); D. Minn. LR 72.2(a).
3 Defendants filed a prophylactic objection to the Magistrate Judges January 2, 2008
order, to the extent plaintiff characterized the order as establishing that a mediation took place
between plaintiff and the USDA. Because the Magistrate Judges February 25, 2008 order
clarifies that it did not determine that any such mediation in fact took place, defendants
objections are moot and are therefore overruled.
- 6 -
II. OBJECTIONS TO THE JANUARY 2, 2008 ORDER
Plaintiff argues that the Magistrate Judges interpretation of Minn. Stat. 595.02,
subd. 1(l) improperly limited the mediation privilege to the testimony of a mediator
regarding mediation negotiations. Plaintiff contends that because the written
communications between plaintiff and the USDA constitute part of a mediation, the
January 2, 2008 order requiring her to produce privileged mediation documents violates
Minn. Stat. 595.02, subd. 1(l). However, the Magistrate Judge made clear in the
February 25, 2008 order that he did not determine that the communications between
plaintiff and the USDA were part of a mediation. The Magistrate Judge determined that
without the relevant documents, he had no factual basis to make such a finding. Plaintiff
has not challenged that determination, and has set forth no factual basis that would allow
this Court to conclude that the communications between plaintiff and the USDA were
part of a mediation. Accordingly, plaintiff has not demonstrated that the Magistrate
Judges decision to compel disclosure of non-privileged, relevant documents was clearly
erroneous or contrary to law.
Even if the Magistrate Judge had determined that communications between
plaintiff and the USDA were part of a mediation, however, the Court is not persuaded
that the Magistrate Judges order compelling disclosure of such communications under
Minn. Stat. 595.02, subd. 1(l), would be clearly erroneous. The statute at issue here
concerns permissible witness testimony in judicial and administrative proceedings, and
provides generally that [e]very person of sufficient understanding, including a party,
may testify in any action or proceeding. Minn. Stat. 595.02, subd. 1. The statute then
- 7 -
sets forth a list of exceptions to this rule.4 Section 595.02, subd. 1(l) states an exception
for the testimony of mediators, and provides that [a] person cannot be examined as to
any communication or document, including worknotes, made or used in the course of or
because of mediation pursuant to an agreement to mediate.
However, the statute goes on to state that [a] communication or document
otherwise not privileged does not become privileged because of this paragraph. Minn.
Stat. 595.02, subd. 1(l). Thus, while the plain language of the statute clearly limits the
testimony of persons involved in mediations, it unequivocally states that unprivileged
communications and documents related to the mediation do not become privileged by
operation of 595.02, subd. (1)(l). Cf. Christian Builders, Inc. v. Cincinnati Ins. Co.,
501 F. Supp. 2d 1224, 1229 n.5 (D. Minn. 2007) (construing a related alternative dispute
resolution privilege under 595.02, subd. 1(a), to preclude testimony or affidavits by a
mediator, but not other admissible evidence of communications regarding those
mediations). Plaintiffs argument that 595.02, subd. (1)(l) creates a privilege as to
otherwise non-privileged communications and documents related to the mediation is
directly contradicted by the statutes plain language. See Boatwright v. Budak, 625
N.W.2d 483, 487 (Minn. Ct. App. 2001) (noting that where the plain language of a statute
is unambiguous, that language is conclusive); see also Larson v. Montpetit, 147 N.W.2d
580, 586 (Minn. 1966) (stating that evidentiary privileges constitute barriers to the
ascertainment of truth and are therefore to be disfavored and narrowly limited to their
4 For example, the statute prohibits attorneys, members of the clergy, and physicians from
testifying in court as to privileged communications with a client, party, or patient. Minn. Stat.
595.02, subds. 1(b), (c), (d).
- 8 -
purposes). Accordingly, the Court finds that the Magistrate Judges construction of the
mediation privilege was neither clearly erroneous nor contrary to law. The Court
therefore overrules plaintiffs objections and affirms the Magistrate Judges January 2,
2008 order.
III. OBJECTIONS TO THE FEBRUARY 25, 2008 ORDER
Plaintiff also objects to two aspects of the Magistrate Judges February 25, 2008
order, which denied plaintiffs motion for reconsideration of the January 2008 order and
granted sanctions against plaintiff. Plaintiff first objects to the Magistrate Judges
determination that plaintiff must produce a privilege log explaining plaintiffs basis for
refusing to produce requested discovery.5 A magistrate judge has broad discretion to
supervise the discovery matters before him. See McGowan v. General Dynamics Corp.,
794 F.2d 361, 363 (8th Cir. 1986). Here, the Magistrate Judge determined that a privilege
log was necessary because plaintiff has repeatedly refused to provide discovery based on
unsubstantiated and conclusory assertions of privilege.
Rule 26(b)(5)(A)(ii) of the Federal Rules of Civil Procedure requires a party
asserting privilege to describe the nature of the documents, communications, or tangible
things not produced or disclosed and do so in a manner that, without revealing
information itself privileged or protected, will enable other parties to assess the claim.
Plaintiff cites Shelton v. American Motors Corp. to argue that supplying a privilege log
5 Plaintiff raised a similar objection to the Magistrate Judges January 2, 2008 order,
which the Court addresses here.
- 9 -
will force plaintiff to reveal mental impressions and legal theories protected under the
attorney work product doctrine. See 805 F.2d 1323, 1328 (8th Cir. 1986). As the
Magistrate Judge correctly determined, however, Shelton involved the scope of
permissible testimony by an opposing counsel during a pending case. The court in
Shelton determined that the deposition of counsel as to discovery-related issues was not
permitted where the counsels selective recollection of certain documents could reveal
which documents were significant and important with respect to her legal theories. Id.
(This case does not involve [defendant]s refusal to produce the documents inquired
about by plaintiffs counsel.) (emphasis added); see also Pamida, Inc. v. E.S. Originals,
Inc., 281 F.3d 726, 730 (8th Cir. 2002) (The Shelton test was intended to protect against
the ills of deposing opposing counsel in a pending case which could potentially lead to
the disclosure of the attorney's litigation strategy.). No effort has been made here to
depose plaintiffs counsel, and nothing in Shelton relieves plaintiff of the obligation to
describe withheld documents so that defendant can assess the applicability of the
privilege. The Court therefore overrules plaintiffs objections on this basis.
Finally, plaintiff objects to the Magistrate Judges award of sanctions in the
amount of ,138. In an order dated August 31, 2007, the Magistrate Judge found that
plaintiff had committed significant discovery abuses warranting sanctions, and directed
the parties to submit briefing as to the appropriate amount of sanctions. Plaintiff did not
object to that order, and the Court agrees that an award of sanctions in this case is
appropriate. The Court notes in particular that plaintiffs ongoing refusal to cooperate
with discovery requests has resulted in no fewer than three motions to compel discovery,
- 10 -
each of which has been granted by the Magistrate Judge, and has caused significant delay
in these proceedings.
Plaintiff does argue, however, that the Magistrate Judges award of ,138 in
attorneys fees as a sanction is greater than necessary to punish and deter plaintiff. Rule
37(b)(2)(C) of the Federal Rules of Civil Procedure allows the Court to order a party that
fails to comply with discovery orders to pay reasonable expenses, including attorneys
fees, caused by the failure, unless the failure was substantially justified or other
circumstances make an award of expenses unjust. The Magistrate Judge enjoys
considerable discretion in choosing appropriate sanctions. See Chrysler Corp. v. Carey,
186 F.3d 1016, 1022 (8th Cir. 1999). When awarding attorneys fees, the Court multiplies
the number of hours reasonably expended by the reasonable hourly rates. Wheeler v.
Mo. Highway & Transp. Commn, 348 F.3d 744, 754 (8th Cir. 2003). A reasonable
hourly rate is usually the ordinary rate for similar work in the community where the case
has been litigated. Emery v. Hunt, 272 F.3d 1042, 1048 (8th Cir. 2001).
Here, defendants sought attorneys fees in the amount of ,431.6 In determining
the number of hours reasonably expended by defense counsel, the Magistrate Judge
carefully reviewed defense counsels billings and the content of their time entries. The
Magistrate Judge deducted the hours claimed by defendants that related to their own
discovery efforts, and deducted additional hours to adjust for the overlapping efforts of
6 Defendants also asked the Magistrate Judge to dismiss plaintiffs complaint in its
entirety, or to bar plaintiff from testifying in subsequent proceedings, as a sanction for the
discovery abuses in this case. The Magistrate Judge determined that plaintiffs discovery abuses,
though substantial, were not so egregious as to warrant such a sanction.
- 11 -
the two defense attorneys, arriving at a total of 171.4 hours reasonably expended as a
result of plaintiffs discovery abuses. With respect to the hourly rate, the Magistrate
Judge noted that an associate working on the case billed her time at a rate of 0.00 per
hour, while a partner on the case billed at 0.00 per hour. The Magistrate Judge
concluded that, given the routine nature of the issues involved, an hourly rate of 0.00
was reasonable under the circumstances. Multiplying the number of hours (171.4) by a
reasonable hourly rate (0.00), the Magistrate Judge arrived at a total award of
,138.00.
Plaintiff argues that the amount of sanctions imposed by the Magistrate Judge is
greater than necessary to ensure compliance with her discovery obligations. While the
award of attorneys fees is substantial, the Court agrees with the Magistrate Judge that the
sanction is merited in light of the plaintiffs repeated failure to comply with discovery
orders. Indeed, it is plaintiffs own refusals that have resulted in a large number of hours
expended by defense counsel on these matters, and which in turn result in the total
amount of attorneys fees awarded. The Court finds that the Magistrate Judge carefully
considered the number of hours expended by defense counsel with respect to plaintiffs
discovery abuses, and applied a reasonable hourly rate in arriving at a total award. As
such, the Magistrate Judges calculation of an appropriate award of attorneys fees was
neither clearly erroneous nor contrary to law.
For these reasons, the Court overrules plaintiffs objections and affirms the
Magistrate Judges order dated February 25, 2008.
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ORDER
Based on the foregoing, all the records, files, and proceedings herein, IT IS
HEREBY ORDERED that:
1. The Court OVERRULES plaintiffs objections [Docket No. 248] and
AFFIRMS the Magistrate Judges Minute Order dated January 2, 2008 [Docket No.
239].
2. The Court OVERRULES plaintiffs objections [Docket No. 269] and
AFFIRMS the Magistrate Judges Order dated February 25, 2008 [Docket No. 265].
3. The Court OVERRULES defendants prophylactic objections [Docket No.
253] to the Magistrate Judges January 2, 2008 Order as moot.
DATED: July 21, 2008 s/ John R. Tunheim _
at Minneapolis, Minnesota. JOHN R. TUNHEIM
United States District Judge
 

 
 
 

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