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Schiff v. Exclusive Legal Marketing, Inc.

United States District Court, S.D. Ohio, Eastern Division

February 20, 2018

SCOTT W. SCHIFF, et al., Plaintiffs,




         This matter is before the Court on Plaintiffs' Motion for Sanctions pursuant to Rule 37(b)(2)(A) of the Federal Rules of Civil Procedure. (Doc. 33). For the reasons that follow, Plaintiffs' Motion for Sanctions is GRANTED, but the Court refrains from awarding any costs and fees until Defendants have had the opportunity to file any documentation demonstrating an inability to pay. Thus, Defendant is DIRECTED to file any such documentation within seven (7) days from the date of this Order. In addition, the parties are DIRECTED to meet and confer in an effort to resolve this issue.

         I. BACKGROUND

         On June 14, 2017, Judge Watson and Magistrate Judge Jolson jointly conducted the Preliminary Pretrial Conference in this matter. (See Doc. 13). In an Order memorializing the conference, Defendants were directed, inter alia, to “produce promptly any documents regarding the damages alleged by Plaintiffs in their Complaint.” (Doc. 15). The next day, Plaintiffs' counsel sent an informal document request to defense counsel. (See Doc. 33 at 2). As of July 12, 2017, no documents had been produced. Consequently, the Undersigned held a status conference. Defendants were once again ordered to produce these documents within the next fourteen days. (Doc. 16). At that time, Defendants were warned that if they failed to comply, they risked being held in contempt of Court. (Id.).

         On August 2, 2017, Plaintiffs filed a Notice of Noncompliance, informing the Court that Defendants had still not produced any documents. (Doc. 17). Although Defendants had turned over some documents to Plaintiffs on August 8, 2017, the production was woefully deficient. (See Doc. 18). Indeed, the responses were neither complete nor responsive enough to Plaintiffs' requests to even begin to understand the potential damages in this case. (See Docs. 18, 19). On August 17, 2017, the Undersigned held another status conference. (Doc. 19). The message was the same. The Court made clear that Defendants were risking contempt of Court and consequently scheduled a Show Cause Hearing for September 25, 2017. (Id.). Defendants thus had an additional 39 days to produce the discovery prior to having to explain to this Court why discovery had not been produced.

         On September 21, 2017 (four days before the Show Cause Hearing), Defendants filed a Notice of Compliance stating “that they [had] complied to the best of the ability to Plaintiffs' Informal Discovery Requests.” (Doc. 22 at 1). In support, Defendants attached the sworn affidavit of Defendant Coety Bryant, in which he averred that the reason Defendant Exclusive Legal Marketing, Inc. (“ELM”) did not have the requested documents was because “Exclusive's previous accountant, Stephanie Miller, improperly maintained records, and likely defrauded, or embezzled funds from Exclusive.” (Doc. 22-1, PAGEID #: 76). Plaintiffs filed a Response to the “Notice of Compliance, ” once again highlighting the deficiencies of the limited documents Defendants had produced and casting doubt on the veracity of the embezzlement allegations. (Doc. 23).

         On September 25, 2017, two hours prior to the scheduled Show Cause Hearing, Defendants filed a Motion to Continue the hearing, stating that Mr. Bryant was unable to attend due to a family emergency. (Doc. 25). The Motion was denied, and the Undersigned held the hearing with only counsel present. (Doc. 26). During the hearing, defense counsel made numerous representations, including that his client had “turned over everything they have” (Doc. 29 at 3); that “[a]s unbelievable as it is, that is what our clients tell us, that they did not have accounting records and they did not have agreements for anybody other than what has been provided” (id. at 4); and that Defendants' hard drive was “completely erased” and “they believe that it has to do with Ms. Miller” (id. at 12).

         The Show Cause Hearing was subsequently continued until October 10, 2017. (Doc. 28). Plaintiffs' counsel, in the meantime,

decided to conduct its own investigation, and obtained via subpoena the depositions transcripts of Mr. Bryant and his brother taken on August 17-18, 2017 in the lawsuit Morgan & Morgan, Fort Myers, PLLC v. Farah & Fara, P.S. and Exclusive Legal Marketing, Inc., Case No 2017-CA-001782, currently pending in Florida state court. Counsel for Plaintiffs reviewed the transcripts, which totaled nearly five hundred pages, and determined that the representations regarding Stephanie Miller made by Defendants' Counsel at the Show Cause hearing were not supported by Mr. Bryant and his brother's prior testimony. [See Declaration of Mary R. True, Doc. # 30] Counsel for Plaintiffs also retained a private investigator to locate Stephanie Miller, and spoke with her at length on October 6, 2010. Ms. Miller agreed to provide a sworn declaration, which was filed with the Court prior to the Show Cause Hearing on October 10, 2017 [Doc. #30-5].

(Doc. 33 at 3).

         Following the continued Show Cause Hearing, the Court again ordered Defendants to produce the remaining discovery. (Doc. 31). The documents at issue were produced to Plaintiffs on October 18, 2017, four months after the Court first ordered the production.

         On November 2, 2017, Plaintiffs filed the instant Motion for Sanctions, explaining that they had spent significant time and expenses litigating Defendants' discovery deficiencies. (Doc. 33 at 3). In total, Plaintiffs' counsel spent over 43 hours litigating discovery issues, and thus request $13, 897.75 in attorney's fees. (Doc. 33-1). Specifically, they request fees for their time beginning on August 2, 2017, through the drafting of the instant motion.

         Attorney Roger Soroka and Joshua Bedtelyon subsequently withdrew as counsel for Defendants and filed a Response in opposition to sanctions on their behalf. (Doc. 40 at 2 (“This Memorandum addresses only the allegation that sanctions should be imposed upon Defendants' prior Counsel, and makes no statement as to whether sanctions may be appropriate as to Defendants.”)). Defendants Bryant and ELM failed to file a timely Response. However, on February 16, 2018, Defendant Bryant filed a Response, purportedly on behalf of himself and ELM. In addition to being untimely, Defendant Bryant may not represent ELM, as was previously explained by the Undersigned. (See Doc. 39). However, in the interests ...

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