DEEPGULF INC and TOKE OIL AND GAS S.A., Plaintiffs, v. MARC M. MOSZKOWSKI, Defendant Case No. 3:18-cv-1466-TKW/MJF United States District Court, N.D. Florida Filed November 05, 2019 Counsel Braden Kirk Ball, Jr., Pensacola, FL, for Plaintiffs. Mary Allie Elizabeth Boller, Thomas Richard Boller, Thomas R. Boller PC, Mobile, AL, for Defendant. Frank, Michael J., United States Magistrate Judge ORDER Plaintiffs moved this court, pursuant to Rule 37(d)(1), to impose sanctions on Defendant for his failure to provide Excel spreadsheets containing financial information that are responsive to one or more requests for production of documents. For the reasons set forth below, this motion must be denied without prejudice. I. Background On April 3, 2018, the Plaintiffs filed this action in Florida state court, and Defendant removed this case to federal court on June 25, 2018. In their complaint, the Plaintiffs allege breach of a non-competition agreement, civil theft, conversion, and fraudulent misrepresentation. Plaintiffs seek, among other relief, an accounting, damages, injunctive and declaratory relief, court costs, and attorney's fees. The Defendant has asserted counterclaims against the Plaintiffs for fraud, breach of contract, and defamation. On November 12, 2018, Plaintiffs propounded requests for the production of documents. Request 18 asked Defendant to produce “Copies of all Toke Oil and Gas, S.A.'s financial, bookkeeping or transaction records from the date that you [Defendant] became involved with Toke Oil and Gas, S.A. to the present date.” According to Plaintiffs, while pro se, Defendant responded: Marc Moszkowski has no knowledge of any clause in the agreement between DeepGulf, Inc., and Toke Oil and Gas S.A. to acquire a majority interest in Toke Oil and Gas, S.A. that would have required prior Toke Oil and Gas, S.A. information to be communicated to DeepGulf, Inc. The Plaintiffs are hereby requested by Marc Moszkowski to produce supporting evidence that he should comply with the request of paragraph 18. (Doc. 194 at 1-2) On April 4, 2019, after Defendant had obtained legal counsel, United States District Court Judge M. Casey Rodgers issued an order that “Defendant shall supplement his discovery responses in accordance with the Rules [of Civil Procedure] on or before May 15, 2019.” On May 15, 2019, Defendant's counsel provided additional discovery materials to Plaintiffs. On July 11, 2019, Plaintiffs filed a motion to compel the Defendant to produce documents responsive to Plaintiffs' Request for Production 19. On August 2, 2019, Defendant's counsel responded that they produced additional documents to Plaintiffs on July 12, 2019, and that they believed that all relevant documents had been produced. Based on this representation and the lack of any disagreement from Plaintiffs, the undersigned denied without prejudice the motion to compel on the ground of mootness. (Doc. 107). According to Plaintiffs, on July 18, 2019, Plaintiffs' counsel sent an email to Defendant's counsel inquiring whether Defendant had additional documents responsive to Plaintiffs' Request for Production 18. Defendant's counsel allegedly represented that “no documents would need to be provided.” (Doc. 105 at 2). According to Plaintiffs, while they were reviewing documents that were responsive to Request for Production 19, Plaintiffs found an email which indicated that Defendant may possess Excel spreadsheets that were responsive to Plaintiffs' Request for Production 18 and which Defendant had not provided to Plaintiffs. The relevant email was from Defendant to an individual by the name of “Rodney Lewis.” The email was dated January 5, 2018, which is approximately three months before Plaintiffs filed this civil action and approximately eight months before Plaintiffs served their requests for production. In the email, Defendant states: I've been working on the Toke accounts again. 1. I don't think that despite their loud demands (which they make as unacceptable as possible) Rus and Tom want me to send them the Toke documents, for a simple reason: I doubt they are dumb enough to believe that I could have received $1,000,000 from Toke, but for as long as I don't send them the documentation they can pretend they think I received the money, which buys time for Rus, who makes it very difficult for anyone to study the DeepGulf accounts and doesn't seem to be prepared to explain his expenses. You could say that I could send them the documentation, but I don't think it can prove anything, since it can be doctored any way you want and they would not fail to say so. The documentation consists exclusively of Excel spreadsheets. (Doc. 104 at 8) (emphasis added). According to Defendant's counsel, Defendant provided these Excel spreadsheets to defense counsel in April 2019, but Defendant's counsel did not produce them to Plaintiffs' counsel. Defendant's counsel explains: Defendant produced said spreadsheets to defense counsel in April 2019, but they were not produced due to defense counsel's information and belief the financial data contained in the spreadsheets had already been summarized in the financial documents already in the hands of Plaintiffs since 2011 and 2012, and because of confidentiality concerns which were acknowledged by Plaintiffs on 31 July 2019. (Doc. 117 at 3, n.1). On August 2, 2019, Plaintiffs filed another motion to compel seeking these additional materials responsive to Request for Production 18. (Doc. 104). Plaintiffs also moved to have this court impose sanctions on Defendant. (Id.). Specifically, Plaintiffs asked this court to enter a default judgment and strike Defendant's counter-claim. Although there are many Eleventh Circuit cases addressing the relevant standard for imposing sanctions pursuant to Rule 37, Plaintiffs' motion for sanctions and the memorandum in support did not cite a single case from the Eleventh Circuit. Indeed, it was largely devoid of analysis and cited only a district court case from the Southern District of New York in addition to a case from the Seventh Circuit and one from the Tenth Circuit. In any event, the motion for sanctions and memorandum in support did not address most of the factors a court is required to address before imposing sanctions. On August 6, 2019, Defendant produced Excel spreadsheets to Plaintiffs. (Doc. 110-1). On August 26, 2019, based on Defendant's representation that he had produced the requested materials on August 6, 2019, the undersigned denied the motion to compel without prejudice in light of its mootness. (Doc. 111). Plaintiffs objected to the undersigned's order insofar as it did not impose sanctions on the Defendant. According to Plaintiffs, the court should impose sanctions on Defendant, pursuant to Rule 37 of the Federal Rules of Civil Procedure, because “Defendant has intentionally, unjustifiable, and in bad faith not responded to Plaintiffs' Requests for Production and violated his obligations under the Federal Rules of Civil Procedure on multiple occasions.” (Doc. 105 at 2). Plaintiffs explain: This is not the first time that Defendant has failed to respond to Plaintiffs' discovery request. It has been a pattern with this Defendant .... The sanction should be severe in light of Defendant's failure to disclose anything initially in this case pursuant to Rule 26, the Defendant's failure to respond with any documents at all while proceeding pro se and the Defendant's withholding of documents from Plaintiffs even when given the opportunity to supplement Defendant's answer to requests for production. (Doc. 105 at 7). Plaintiffs, therefore, again ask that the court: (1) impose a default judgment against Defendant; and (2) strike Defendant's counter-claim. II. Discussion A district court's broad power to control discovery “includes the ability to impose sanctions on uncooperative litigants.” Phipps v. Blakeney, 8 F.3d 788, 790 (11th Cir. 1993); Malautea v. Suzuki Motor Co., Ltd., 987 F.2d 1536, 1542 (11th Cir. 1993) (Rule 37 “gives district judges broad discretion to fashion appropriate sanctions for violation of discovery orders ....”); In re Chase & Sanbon Corp., 872 F.2d 397, 400 (11th Cir. 1989) (“The district court has broad, although not unbridled discretion in imposing sanctions under Rule 37.”) (quoting Dorey v. Dorey, 609 F.2d 1128, 1135 (5th Cir. 1980)). Rule 37 of the Federal Rules of Civil Procedure provides that a court may impose sanctions when a party “fails to obey an order to provide or permit discovery, including an order under Rule 26(f), 35 or 37(a)” or when “a party after being properly served with interrogatories under Rule 33 or a request for inspection under Rule 34, fails to serve its answers, objections, or written responses.” Fed. R. Civ. P. 37(d)(1). “A failure to disclose under Rule 37 encompasses both the destruction of evidence, or spoliation, and untimely production of documents and information required to be produced.” In re September 11th Liability Ins. Coverage Cases, 243 F.R.D. 114, 125 (S.D.N.Y. 2007). Sanctions under Rule 37 are intended to (1) compensate the court and parties for the added expenses caused by discovery abuses, (2) compel discovery, (3) deter others from engaging in similar conduct, and (4) penalize the offending party or attorney. Wouters v. Martin Cty., 9 F.3d 924, 933 (11th Cir. 1993); Carlucci v. Piper Aircraft Corp., Inc., 775 F.2d 1440, 1453 (11th Cir. 1985); see National Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639, 643, 96 S. Ct. 2778, 2781 (1976) (per curiam) (noting that sanctions are imposed “not merely to penalize those whose conduct may be deemed to warrant such a sanction, but to deter those who might be tempted to such conduct in the absence of such a deterrent”); Cochran Consulting, Inc. v. Uwatec USA, Inc., 102 F.3d 1224, 1236 (Fed. Cir. 1996) (“The purpose of sanctions under Rule 37(b)(2) is not to reward parties who comply with discovery orders, but to punish those who do not and to deter others similarly situated.”). Courts also impose sanctions to “prevent unfair prejudice to litigants and insure the integrity of the discovery process.” United States v. One 32' Scorpion Go-Fast Vessel, 339 F. App'x at 903, 905 (11th Cir. 2009); Gratton v. Great Am. Comm'cns., 178 F.3d 1373, 1374-75 (11th Cir. 1999) (citing Aztec Steel Co. v. Florida Steel Corp., 691 F.2d 480, 482 (11th Cir. 1982)). Rule 37(d) authorizes courts to impose the following sanctions: 1. directing that matters embraced in the order or other designated facts be taken as established for the purpose of the action, as the prevailing party claims; 2. prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence; 3. striking pleadings in whole or part; 4. staying further proceedings until the order is obeyed; 5. dismissing the action or proceeding in whole or in part; and 6. entering a default judgment against the offending party. Fed. R. Civ. P. 37(b)(2)(A), (d)(3). In addition, under Rule 37(d)(3): Instead of or in addition to these sanctions, the court must require the party failing to act, the attorney advising the party, or both to pay the reasonable expenses, including attorney fees, caused by the failure, unless the failure was substantially justified or other circumstances make an award of expenses unjust. Fed. R. Civ. P. 37(d)(3) (emphasis added); see Gratton v. Great Am. Commc'n, 178 F.3d at 1374. The party seeking sanctions under Rule 37 bears the burden of establishing that an opposing party failed to comply with Rule 26 or a discovery order. Silvagni v. Wal-Mart Stores, Inc., 320 F.R.D. 237, 241 (D. Nev. 2017); New World Solutions, Inc. v. NameMedia, Inc., 150 F. Supp. 3d 287, 304 (S.D.N.Y. 2015); Lodge v. United Homes, LLC, 787 F. Supp. 2d 247, 258 (E.D.N.Y. 2011). If the party can establish that a discovery violation occurred, that party then has the burden of establishing the appropriateness of a requested sanction at least by a preponderance of the evidence. Ramirez v. T&H Lemont, Inc., 845 F.3d 772, 778 (7th Cir. 2016); see United States v. Regan, 232 U.S. 37, 49, 34 S. Ct. 213, 217 (1914) (noting that “the general rule applicable to civil suits” entails “proof by a reasonable preponderance of the evidence”). In considering whether a sanction should be imposed—and what sanction should be imposed—courts should consider: 1. the purposes to be served by the imposition of sanctions, including deterrence of future discovery violations, punishment of current violations, compensation of the offended party, and conservation of the court's time and resources; 2. the importance of the materials that were not produced—from the perspective of the offended party's ability to litigate the case—and what prejudice, if any, the offended party suffered; 3. if the offended party suffered prejudice, the monetary cost suffered, if any; 4. whether the discovery caused important events to be delayed (such as a trial) and, if so, the extent of the delay; 5. whether the offending party violated a specific order of the court instructing it to provide the offended party with an item or materials; 6. whether the discovery violation(s) placed a burden on the district court and, if so, the extent of the burden; 7. whether the offending party committed a single discovery violation or multiple violations; 8. the offending party's asserted justification for its conduct, if any, and its legitimacy; 9. whether the discovery violation was committed willfully, in bad faith, inadvertently, or due to a party's inability or excusable neglect;[1] 10. whether the discovery violation(s) is attributable to the client, counsel, or both; 11. whether the offending party was warned that sanctions or a specific sanction might be imposed, but disregarded such warning; 12. whether any lesser sanction would substantially serve the same purposes as a more severe sanction; and 13. whether the requested sanction would be just in light of the particular circumstances of the case and whether it is proportional to the harm inflicted. See Societe Internationale Pour Participations Industrielles et Commerciales, S.A. v. Rogers, 357 U.S. 197, 212, 78 S. Ct. 1087, 1096 (1958); ML Healthcare Servs., LLC v. Publix Super Markets, Inc., 881 F.3d 1293, 1309 (11th Cir. 2018); Tobnicki v. Novella, 848 F.3d 935, 949 (11th Cir. 2017); Angiodynamics, Inc. v. Biolitec AG, 780 F.3d 429, 435 (1st Cir. 2015); Harriman v. Hancock Cty., 627 F.3d 22, 30 (1st Cir. 2010); OFS Fitel, LLC v. Epstein, Becker & Greene, P.C., 549 F.3d 1344, 1362-65 (11th Cir. 2008); United States v. Reyes, 307 F.3d 451, 457-58 (6th Cir. 2002); Webb, 146 F.3d at 971; Malautea, 987 F.2d at 1542; Jones v. Thompson, 996 F.2d 261, 264 (10th Cir. 1993); Navarro v. Cohan, 856 F.2d 141, 142 (11th Cir. 1988); Ford v. Fogarty Van Lines, 780 F.2d 1582, 1583 (11th Cir. 1986). Furthermore, requests that a court impose the sanctions of dismissal or entry of a default judgment require substantial justification. Courts must be “cognizant of the drastic nature of a default judgment, which deprives a party completely of its day in court.” Webb, 146 F.3d at 971. A district court's power to impose dismissal or default judgment against the non-compliant party, therefore, should be used only as a last resort. Malautea, 987 F.2d at 1542 (“[T]he severe sanction of a dismissal or default judgment is appropriate only as a last resort, when less drastic sanctions would not ensure compliance ....”); Phipps, 8 F.3d at 790 (noting that “dismissal without prejudice is the most severe Rule 37 sanction and is not favored ... ”). This is due to the strong policy in favor of courts adjudicating cases on their merits. Foman v. Davis, 371 U.S. 178, 181-82, 83 S. Ct. 227, 230 (1962) (noting the preference in American law for cases to be decided on their merits); Perez v. Wells Fargo N.A., 774 F.3d 1329, 1342 (11th Cir. 2014) (noting the “strong preference that cases be heard on the merits”); Webb, 146 F.3d at 971 (noting that because “disposition of cases on the merits is generally favored,” a “default judgment must be a ‘sanction of last resort,’ to be used only when less onerous methods” will be ineffective). Because a default judgment prevents a party from having its claim or defense adjudicated on the merits, a party seeking a default judgment as a sanction has a substantial burden. Hammond Packing Co. v. State of Arkansas, 212 U.S. 322, 349-52, 29 S. Ct. 370, 379-81 (1909); Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1371 (11th Cir. 1997); Searock v. Stripling, 736 F.2d 650, 653 (11th Cir. 1984); Troy State Univ., 693 F.2d at 1354. A district court should impose this sanction only when it finds that: (1) there is a clear record of delay, bad faith, or willful contempt; and (2) no lesser sanctions would sufficiently vindicate the relevant interests. Watts v. Ford Motor Co., 648 F. App'x 970, 973 (11th Cir. 2016) (quoting Betty K. Agencies, Ltd. v. M/V Monada, 432 F.3d 1333, 1338 (11th Cir. 2005)); Falstaff Brewing Corp. v. Miller Brewing Co., 702 F.2d 770, 784 n.8 (9th Cir. 1983) (“[T]he use of Rule 37 sanctions must be tempered by due process .... [I]t is improper to dismiss a claim or to exclude evidence if the failure to comply with a discovery order is due to circumstances beyond the disobedient party's control.”). Thus, a “violation of a discovery order caused by simple negligence, misunderstanding, or inability to comply will not satisfy a Rule 37 default judgment or dismissal.” Malautea, 987 F.2d 1542; see Rogers, 357 U.S. at 212, 78 S. Ct. at 1096 (“Rule 37 should not be construed to authorize dismissal of this complaint because of petitioner's noncompliance with a pretrial production order when it has been established that failure to comply has been due to inability, and not to willfulness, bad faith, or any fault of petitioner.”). Here, Plaintiffs did not even mention—much less discuss or offer evidence concerning—most of the factors this court must consider in determining whether any sanction is warranted and, if so, what sanction(s) should be imposed. For example, the Plaintiffs have not explained how they suffered prejudice and what costs and attorneys fees they incurred, if any, due to Defendant's failure to produce the requisite discovery materials. As the movants, Plaintiffs bear the initial burden to address the relevant factors and apprise this court of the relevant law. They have not carried their burden and have not provided essential information that this court must consider to address a motion for sanctions. See Carlucci, 775 F.2d at 1447 (noting that in imposing sanctions a court must make findings that are “ ‘fully supported by the record’ ”) (quoting National Hockey League, 427 U.S. at 642-43, 96 S. Ct. at 2780-81). This court, therefore, must deny Plaintiffs' motion for sanctions. See Carlucci, 775 F.2d at 1453 (noting that the record must contain a justification for the sanction and an accounting of the reasonable expenses including attorney's fees caused by the discovery violation). III. Conclusion For the reasons set forth above, Plaintiffs' motion for sanctions is DENIED without prejudice. SO ORDERED this 5th day of November, 2019. Footnotes [1] “[O]nly in a case where the court imposes the most severe sanction—default or dismissal—is a finding of willfulness or bad faith failure to comply necessary.” BankAtlantic v. Blythe Eastman Paine Webber, Inc., 12 F.3d 1045, 1049 (11th Cir. 1994); EEOC v. Troy State Univ., 693 F.2d 1353, 1357 (11th Cir. 1982) (noting that a “party's simple negligence or other action grounded in a misunderstanding of a court order does not warrant dismissal”). Nevertheless, whether a party acted in bad faith or willfully is a relevant factor in determining whether sanctions should be imposed and, if so, an appropriate sanction.