Mission 1st Group, Inc, Plaintiff, v. Mission First Solutions, LLC, Defendant Case No. 1:23-cv-01682-DJN United States District Court, E.D. Virginia December 16, 2024 Merritt, Craig T., Special Master SECOND REPORT AND RECOMMENDATIONS OF THE SPECIAL MASTER *1 The First Report and Recommendations of the Special Master (ECF No. 59) (“First Report”), dated October 31, 2024, recited the facts and circumstances of the appointment of the Special Master, and the objectives of the Court's assignment to the Special Master, which are not repeated here. See also Appointment Order (ECF No. 40), dated October 15, 2024. The Special Master directed a follow-up inquiry to counsel by electronic mail on December 5, 2024, to determine whether any discovery matters remained unresolved. This Second Report and Recommendations (“Second Report”) addresses matters that counsel for the parties brought to the attention of the Special Master in response to that inquiry. This Second Report addresses these items: (1) Request by the plaintiff to extend briefing deadlines in light of defendant's continued discovery failures. (2) Requests by both parties to reopen the Rule 30(b)(6) depositions of the adversary. (3) Request by plaintiff for production by the defendant of additional documents. (4) Request by defendant for the production by plaintiff of additional documents. (5) Request by plaintiff for additional sanctions in addition or as an alternative to a directive to the defendant to produce withheld documents. I. Mission1st Group, Inc.'s Request for Extension of Summary Judgment Briefing Deadlines Plaintiff has requested that the Court extend the December 15, 2024, deadline to submit its supplemental summary judgment brief permitted by the Court's Order (ECF No. 70) entered on November 8, 2024. The Special Master does not recommend granting the requested extension. First, although no trial date is presently set, the Court has indicated its intention to resolve the matter in whole or in part, if possible, on summary judgment. See ECF No. 70. If either party seeks to further extend a briefing deadline established by order of the presiding judge, they are free, and have been free, to direct that request to the presiding judge. Second, plaintiff's request is made against a documented background of dilatory conduct by counsel for both parties. The Special Master only has this assignment because the Court (1) found that the parties' respective motions to compel discovery only as the discovery cutoff was upon them reflected a failure “to make a good faith effort to comply” with discovery obligations and (2) stated “that neither party has taken these obligations seriously.” Order (ECF No. 37) dated October 8, 2024. The First Report indicated that the Special Master considered denying both parties' requests to conduct Rule 30(b)(6) depositions in light of their demonstrated lack of diligence and cooperation. First Report (ECF No. 59) at 13. Instead, the Special Master recommended, and the Court subsequently ordered, that Rule 30(b)(6) depositions be conducted within the limits stated in the Special Master's First Report. See Order (Adopting Special Master's First Report and Recommendation) (ECF No. 60) dated November 01, 2024.[1] The First Report stated the rationale for allowing these depositions. It was not a reward for dilatory conduct by counsel; it was intended to serve the interests of the Court and the adjudicative process. See First Report at 13-14. *2 The depositions were conducted on November 19 and 20, 2024, as scheduled by counsel in coordination with the Special Master. Sixteen days after the plaintiff's scheduled taking of defendant's Rule 30(b)(6) deposition, having heard nothing from counsel for either party, the Special Master inquired of counsel whether discovery was complete and whether any loose ends needed to be tied up. On December 6, 2024, the following day, counsel for both parties responded with email messages laying out problems that they claimed were exposed by the depositions. On Monday, December 9, 2024, counsel for plaintiff sent a supplemental email message asking for an extension of the December 15, 2024, supplemental summary judgment briefing deadline ordered by the Court. Plaintiff's request to extend the supplemental briefing deadline came twenty days after the November 19, 2024, deposition that is the source of Plaintiff's complaints, and six calendar days before the deadline. It illustrates the failure of counsel to grasp the messages that both the Court and the Special Master have delivered regarding dilatory behavior. Any of the concerns raised by plaintiff were obvious on November 19, 2024, and could have been communicated to, and addressed by, the Special Master within a few days of the deposition. Their effect on the summary judgment supplemental briefing schedule could have been explained at that time. There is no doubt that the plaintiff was aware of the Special Master's availability, as demonstrated by an exchange between counsel at the November 20, 2024, deposition of plaintiff's own Rule 30(b)(6) designee. Rule 30(b)(6) Deposition of Plaintiff (designee Zareck), Transcript at 225:21-227:22 (colloquy concerning submission of contested matter to the Special Master). Third, the Special Master's declination to recommend further extension of the summary judgment briefing deadlines does not mean that the defendant's failure to comply with its document production obligations will go unaddressed. Rather than further extend the briefing schedule, however, the Special Master will recommend that the summary judgment briefing process be modified to reduce the opportunity for the defendant to gain an edge through its failure to produce documents. See Part III.B. below. II. Requests of Both Parties to Reopen Depositions Until they were contacted by the Special Master, neither party sought relief to address the shortcomings of its adversary revealed at the Rule 30(b)(6) depositions. Rules 30 and 37 of the Federal Rules of Civil Procedure were available and offered either party the ability to frame a timely argument that its opponent's testimony revealed improper discovery conduct. A. Plaintiff's Request to Reopen Deposition of Designee Jebur Plaintiff asserts that the designated witness of the defendant, Mr. Haider Jebur, the founder of the defendant, was unprepared to testify as an effective corporate designee, and that he repeatedly admitted his company had not produced documents within the scope of plaintiff's Rule 34 requests. Rather than seeking a timely remedy informed by the Federal Rules of Civil Procedure, plaintiff advises that it “reserves the right” to further depose the defendant's designee about additional documents that are produced. Ortega Letter to Special Master, dated December 10, 2024 (Exhibit 1 to this Second Report), at 2. This laconic assertion of a “reservation of rights” is completely detached from the reality that plaintiff was already on borrowed time when it obtained permission to take a Rule 30(b)(6) deposition, well after the original discovery deadline and only under the conditions stated in the First Report and adopted by the Court. Plaintiff's request for a further deposition to ask questions about documents not yet produced should be denied. The transcript of the Rule 30(b)(6) deposition of Mr. Jebur speaks for itself, and counsel for Mission1st have the ability to point out in their supplemental summary judgment opening brief, and again in their reply brief, how the Court should evaluate the defendant's document production shortcomings. Moreover, the recommendations below should reduce prejudice to the plaintiff in the briefing process. B. Defendant's Request to Reopen Deposition of Designee Zareck *3 Defendant seeks to resume the deposition of Mr. Richard Zareck, founder of the plaintiff, for an additional hour on the grounds that counsel for plaintiff opened the door to questions about the DOJ fraud investigation by questioning defendant's witness, Mr. Jebur, about the same matters. Consequently, defendant argues that objections and instructions to Mr. Zareck not to answer questions on that topic were improper. Krimnus Letter to Special Master, dated December 10, 2024 (Exhibit 2 to this Second Report) at 3. To set the stage for evaluating these arguments, the First Report made it clear that the plaintiff would not be required to produce its internal records relating to the conduct of a DOJ fraud investigation and a related settlement, which were asserted by defendant to be relevant and by plaintiff to be immaterial. However, the plaintiff was ordered to produce documents on narrower matters relating to public and customer responses to the settlement, including CPARS records. Documents evaluating and monitoring the effect of publicity about the settlement with DOJ on prospective customers and on the plaintiff's reputation and goodwill were deemed relevant and discoverable. First Report at 10-11. Plaintiff's questioning of Mr. Jebur did not “open the door” to discovery of evidence outside the scope of the Court's order. Plaintiff's counsel did ask the defendant's designee about aspects of the DOJ investigation. Rule 30(b)(6) Dep. Tr. (designee Jebur) at 318:10-324:7. Counsel for defendant, for obvious reasons, did not object to this line of questioning as being outside of the scope of permissible discovery. In fact, the questions did not exceed the scope of what was ruled to be discoverable. The transcript shows that Mr. Jebur, a market participant and alleged competitor, was questioned about how he learned of the DOJ investigation from public sources. The questioning had nothing to do with the plaintiff's internal response to the investigation or the details of its settlement negotiations with the government. The questions were within the scope of the issues that required the plaintiff to produce documents, and within the scope of permitted discovery in general. Defendant, for the same reasons, was entitled to question plaintiff's designee, Mr. Zareck, on the same permitted topics – plaintiff's internal process of monitoring public information about the DOJ investigation and evaluating the effects, if any, of that negative publicity on the reputation and goodwill of the company. The excerpt from the transcript of the Zareck deposition proffered by the defendant reveals that defense counsel asked questions and obtained answers on: (1) the effect of the DOJ press release on discussions with customers or potential customers, Rule 30(b)(6) Dep Tr. (designee Zareck) at 229:12-16, 230:11-16; (2) internal discussions at Mission1st concerning publicity about the DOJ settlement, Id. at 229:17-230:1; (3) the effect of the settlement on the contracting and proposal evaluation process, Id. at 238:9 – 240:17; (4) company concerns over the effect of the settlement on its goodwill, Id. at 240:18 – 241:9; (5) the effect of the settlement on business partners, Id. at 241:10 – 14. See Excerpts from Transcript of Rule 30(b)(6) Deposition of Plaintiff (Exhibit 3 to this Second Report). All of these topics were fairly within the scope of permissible discovery. Some questions were asked and answered over the objections of plaintiff's counsel. The witness was instructed not to answer a question about the DOJ investigation of Mission1st on the grounds that it was outside the boundaries of the Court's ruling. Id. at 232:2-11. After a brief colloquy in which counsel for the defendant insisted that the witness could testify on personal knowledge, the examination proceeded, and the witness gave a lengthy answer concerning the origin of the government investigation. Id. at 234:11-236:3. With no question pending, plaintiff's counsel thereafter announced that she would instruct the witness not to answer any further questions about the government investigation. Counsel for defendant then asked a series of questions about government audits to which no objection was made, and answers were given. Id. at 236:8-237:6. With no question pending, plaintiff's counsel again stated that she would instruct her client not to answer any question outside the confines of the Court's order. Id. at 237:7-10. None of these instructions obstructed any answers, because no question was pending when the instructions were given. *4 Only one question was asked (twice) and not answered on the basis of an instruction from counsel for the witness. Mr. Zareck was asked whether he was aware of settlements with other subcontractors associated with the Lockheed Martin contract. He was instructed not to answer on the basis of the Court's order and gave no answer. Id. at 236:22-238:1. This question was sufficiently far afield from the topics permitted by the Court's order that the objection and instruction not to answer had a good faith basis. Defendant argues that (1) as a general rule the designation of an individual as a Rule 30(b)(6) designee does not bar questioning of the witness on topics within the personal knowledge of the witness, and (2) the instruction not to answer was improper. However, this was not a run-of-the-mine Rule 30(b)(6) deposition conducted in the absence of constraints imposed by the Court. The depositions were expressly limited to specific topics, and it is disingenuous to evade a court-ordered restriction by citing a general rule that might otherwise apply. Moreover, Rule 30(c)(2) of the Federal Rules of Civil Procedure states that one of the few grounds for instructing a witness not to answer is to “enforce a limitation ordered by the court.” To the extent counsel for defendant believed the instruction not to answer was not supported by the Court's order, it did not act timely to bring the matter to resolution before the Special Master. The record simply fails to support the assertions offered by defendant to justify its requests for an additional hour of questioning, and the Special Master recommends that the request be denied. III. Mission1st Group, Inc.'s Demand for Production of Documents by Defendant A. Recommendations Addressing All Documents Not Produced to Date Plaintiff's submission to the Special Master cites transcript references from the testimony of defendant's Rule 30(b)(6) designee, Mr. Jebur, in which the witness identified categories of documents that have still not been produced. These are documents relating to: (1) document retention policy; (2) creation of the infringing mark; (3) first use of the allegedly infringing mark; (4) first use of the allegedly infringing domain; (5) business plans and related materials such as facility clearance documents; (6) contracts and customers; and (7) knowledge of plaintiff's mark and instances of confusion. Counsel for the defendant acknowledged during a December 13, 2024, audio-visual conference with the Special Master that his client had not yet produced any documents identified by Mr. Jebur at the Rule 30(b)(6) deposition. When asked how quickly that could be accomplished, counsel advised that it could be done in seven to fourteen days. December 27, 2024, is fourteen days from the date of that representation by counsel. The Special Master recommends that the Court order the immediate production of all documents identified by Mr. Jebur at the Rule 30(b)(6) deposition of the defendant, including documents in the seven categories listed above, with production to be completed on or before December 27, 2024. There is one exception to this requirement. As to category (6) addressing contracts and customers, the plaintiff argued successfully that it should not be required to produce all of its contracts in their entirety, but instead be permitted to offer a summary of its contracts disclosing certain key information about those contracts. See First Report at 11-12. In response to this argument, the Special Master recommended, and the Court ordered, that plaintiff only be required to prepare and serve a summary of its contracts. The defendant should be ordered to do the same, and serve the summary promptly, but no later than December 27, 2024, providing the same level of detail as the summary provided by the plaintiff. *5 The Special Master also recommends that, should the defendant fail to meet the December 27, 2024, deadline, the Court entertain a motion by plaintiff, or act sua sponte, to impose such sanctions under Rule 37(b) as it deems proper to address the failure. B. Recommendations Concerning Document Categories Addressed in First Report The first four categories of documents identified in subsection III.A. above were the subject of a motion to compel by the plaintiff that was argued by counsel at the Special Master's October 25, 2024, hearing and addressed in the First Report. In addition to eliciting a general assurance by defendant's counsel that document production was complete, see October 25, 2024, Hearing Transcript (“SM Hrg. Tr.”) at 18:18-19:4, the Special Master directed specific questions to counsel for the defendant pressing him to affirm that a complete search had been conducted and all responsive documents produced as to specific contested requests. See Excerpts from Transcript of Special Master October 25, 2024, Hearing (Exhibit 4 to this Second Report). Typical of these exchanges was the colloquy concerning Plaintiff's Request for Production of Documents No. 6, seeking document retention policies. SM Hrg. Tr. at 22:21-25:12. Counsel for defendant made the unqualified assertion to the Special Master that “We represented [to opposing counsel] that there is no such policy.” Id. at 23:21-22. The Special Master pressed counsel twice on the point: SPECIAL MASTER MERRITT: Did your client have a document retention policy in place at any time as far as your inquiry has determined? MR. KRIMNUS: No. ... SPECIAL MASTER MERRITT: I take it, then, that there will be no evidence, written, oral, or any other kind, offered by the Defendant about a document retention policy because, to your knowledge, one never existed? MR. KRIMNUS: That's right. Id. at 24:13-16, 24:21-25:2. This pattern repeated itself with regard to Request for Production No. 8 (seeking documents concerning creation of the allegedly infringing mark), SM Hrg. Tr. at 25:15-30:13 (colloquy at 29:9-30:10 representing that “there are no documents now”); Request for Production No. 9 (seeking documents concerning first use of the allegedly infringing mark), SM Hrg. Tr. at 39:2-21 (counsel affirming conduct of a thorough search for documents and acknowledging the fact that an interrogatory response is not an alternative to document production); and Request for Production No. 11 (seeking documents concerning the first use of the allegedly infringing domain), SM Hrg. Tr. at 49:10-50:16 (counsel representing that anything relating to creation and first use of the website had been retrieved and produced). Taking the testimony of the defendant's Rule 30(b)(6) designee, Mr. Jebur, at face value, it is evident that the above representations of counsel to the Special Master were false. Mr. Jebur testified that he had either not performed a complete search for, or had failed to produce, documents in each of the four categories described above. See Excerpts from Transcript of Rule 30(b)(6) Deposition of Defendant (Exhibit 5 to this Second Report). The company has a document retention policy that can be produced. Rule 30(b)(6) Dep Tr. (designee Jebur) at 43:19-45:8. Mr. Jebur accessed an application available online to create the company logo, using an old laptop computer now stored in his attic, neither of which he tried to access to determine if relevant and responsive documents might be retrieved. Id. at 144:5-145:20. Mr. Jebur testified in connection with early use of the allegedly infringing mark that he would go back and dig through the files and “hopefully I will find something from 2017 showing that design mark.” Id. at 168:4-9. This testimony reveals more than minor oversights that are to be expected, and promptly corrected, in the discovery process. Mr. Jebur's testimony demonstrated a genuine misunderstanding of the depth and seriousness of the search for responsive records that is mandated by the Federal Rules of Civil Procedure. Seven weeks after the discovery cutoff of October 7, 2024, the individual designated by defendant to give binding testimony on its behalf remained casual in his disregard of his company's discovery obligations. How this state of affairs arose is not known; neither are the underlying communications between attorney and client. However, when counsel repeatedly and without qualification affirmed to the Special Master that the defendant had fulfilled its obligations to locate, retrieve, and produce documents, his representations had consequences. Rather than treating elements of the plaintiff's motion to compel as moot, the Special Master would have recommended that defendant be ordered to produce responsive documents forthwith. The recommendation in Part II.A. above addresses the recommended timeline for the production of all remaining documents by the defendant, including those in categories previously addressed in the First Report. Still to be resolved are (1) how to remedy any prejudice to the plaintiff in the supplemental briefing on its motion for summary judgment, and (2) how to evaluate the false representations of defense counsel to the tribunal. With regard to reducing prejudice to the plaintiff in the summary judgment supplemental briefing, the Special Master recommends that: (1) Defendant be prohibited from using any document that was not produced by December 13, 2024, in support of or in opposition to any motion for summary judgment. (2) Plaintiff, which has been deprived of the ability to use unproduced documents in support of its summary judgment arguments, shall note in its opening supplemental brief that it may have been hampered in its assessment and presentation of the evidence by the defendant's failure to produce documents. (3) Plaintiff, which will presumably have all available documents in its possession no later than December 27, 2024, will be entitled, but not required, to submit a reply brief up to ten (10) pages in excess of the otherwise permitted length, and in its reply brief plaintiff may support its argument by using any document produced by defendant that was unavailable when it submitted its opening supplemental brief. (4) Defendant be prohibited from offering any sur-reply brief or other opposition to the plaintiff's reply brief, and from otherwise opposing plaintiff's use of any late-produced document in its reply brief. The conduct of counsel for the defendant is a separate and independent issue. Practice in this Court is subject to the Virginia Rules of Professional Conduct. See Federal Rules of Disciplinary Enforcement, Rule IV.B. It is fundamental that a lawyer shall not knowingly make a false statement of fact to a tribunal. Va. Rules of Prof. Conduct, Rule 3.3(a)(1). Moreover, fairness to opposing counsel requires a “diligent effort to comply with a legally proper discovery request.” Id. Rule 3.4(e). It is obvious that representations made in this civil action by defendant's counsel to opposing counsel, and at the October 25, 2024, hearing before the Special Master, regarding the defendant's search for and production of records were false. The open question is whether they were “knowing.” Without conducting a full-blown hearing on this collateral matter, the Special Master is not prepared to make a finding that the representations made on October 25 were made knowingly. However, the generally dismissive stance of defendant and its counsel toward Court-ordered deadlines, as well as the sworn testimony of Mr. Jebur, are strong indicators that a deeper inquiry might result in a finding adverse to counsel for the defendant. The Special Master does not recommend such a collateral inquiry at this time. However, the Special Master does recommend that any further instances of conduct that demonstrate a lack of candor toward the Court be taken seriously and considered as a basis for sanctions against counsel that include a finding of contempt. IV. Mission First Solutions, LLC's Demand for Production of Documents by Plaintiff *7 Defendant seeks the production of documents relating to trademark enforcement by the plaintiff, specifically “cease and desist letters and related communications concerning alleged misuses of plaintiff's mark.” Krimnus Letter to Special Master, dated December 10, 2024, at 2. Such documents would be responsive to four Requests for Production of Documents served by the defendant, specifically Nos. 34, 36, 37, and 38. Plaintiff's Rule 30(b)(6) designee, Mr. Zareck, testified that plaintiff had transmitted cease and desist letters to entities other than the defendant. These requests were not within the scope of any motion to compel previously submitted to the Special Master for consideration. It is clear that if the plaintiff possesses these records, they should have been produced months ago. They must be located, retrieved, and produced promptly. Therefore, the Special Master recommends that the plaintiff be ordered to produce documents consisting of cease and desist letters and related communications promptly, and in all events on or before December 27, 2024. Failure to do so will subject plaintiff to remedies under Rule 37(b) of the Federal Rules of Civil Procedure for failure to comply with a discovery order of the Court. V. Mission1st Group Inc.'s Demands for Additional Relief Plaintiff also requests, in the event it does not obtain additional documents or get the opportunity to take the deposition of defendant on such documents, that it be entitled to preclude defendant from presenting evidence on affected topics. For the reasons discussed above, including plaintiff's own lack of diligence, the Special Master recommended that the plaintiff not be given the opportunity to resume and extend its Rule 30(b)(6) deposition of the defendant. Moreover, relief has been recommended in Part III.B. above to reduce any prejudice to the plaintiff in the summary judgment briefing process. The Special Master was appointed to oversee discovery. The boundaries set by the Appointment Order counsel that the Special Master not make recommendations that involve issue preclusion or evidentiary rulings that materially affect the Court's management of the trial of the case. Thus, the Special Master makes no recommendations in this regard. As discussed above, the Special Master has identified concerns about the completeness and diligence of defendant's document search and production, and noted its lack of candor toward the tribunal regarding those matters. The Court is now apprised of those concerns and is best situated to determine whether and to what extent they should constrain the defendant's introduction of proof at trial. Respectfully submitted, Craig T. Merritt Special Master Richmond, Virginia Footnotes [1] The parties' submissions seem to be premised on a misapprehension of the effect of the Court's prior actions. When the Court entered its order adopting the First Report, the Special Master's recommendations became an order of the Court governing discovery. Failure to comply with an order concerning discovery moves the parties and their counsel directly into the realm of Rule 37(b) of the Federal Rules of Civil Procedure.