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A PDX Pro Co., Inc. v. Dish Network Serv., LLC

United States District Court, D. Colorado

November 30, 2015

A PDX PRO CO., INC., an Oregon corporation, Plaintiff,
v.
DISH NETWORK SERVICE, LLC, a Colorado limited liability company, Defendant

          For A PDX Pro Co., Inc., an Oregon Corporation, Plaintiff: Richard Albert Oertli, Richard A. Oertli, Attorney at Law, Conifer, CO; Wes P. Wollenweber, Ciancio Ciancio & Brown, P.C-Broomfield, Broomfield, CO.

         For Dish Network Service, L.L.C., a Colorado Limited Liability Company, Defendant: Darren E. Nadel, LEAD ATTORNEY, Alyson Alexis Smith, Jennifer S. Harpole, Michelle Lynn Gomez, William Edward Trachman, Littler Mendelson, PC-Denver, Denver, CO; Richard Robert Olsen, Olsen Law Firm, P.C., The, Houston, TX.

         For Richard A. Oertli, Interested Party: Bennett S. Aisenberg, Bennett S. Aisenberg, P.C., The Law Offices of, Denver, CO; Richard Albert Oertli, Richard A. Oertli, Attorney at Law, Conifer, CO.

         For William Carl Groh, Interested Party: Nancy Lin Cohen, MiletichCohen, PC, Denver, CO.

         For Wes P. Wollenweber, Interested Party: Scott Frederick Reese, LEAD ATTORNEY, Scott F. Reese, P.C., Louisville, CO; Wes P. Wollenweber, Ciancio Ciancio & Brown, P.C-Broomfield, Broomfield, CO.

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         ORDER REGARDING DEFENDANT'S REQUEST FOR SANCTIONS

         Craig B. Shaffer, United States Magistrate Judge.

         Unlike the toils of Sisyphus, who was condemned to perpetually roll a large boulder up a steep hill, lawsuits and discovery disputes should come to an end. No one can reasonably dispute that the instant case has run its course, at least at the trial level.

         This matter comes before the court on Defendant Dish Network Service, LLC's (hereinafter " Dish" ) Motion for Allocation of Sanction Fees (doc. #249). With these submissions, Dish seeks an order holding Plaintiff A PDX Pro, Co., Inc. (hereinafter " PDX" ) and two of its attorneys, Richard Oertli and William Groh, jointly and severally liable for financial sanctions attributable to discovery violations in this case. More specifically, the pending motion seeks an order allocating $127,455.75 in fees that Defendant incurred based upon sanctionable conduct that Dish attributes to Mr. Oertli and Mr. Groh. Messrs. Oertli and Groh filed separate response briefs (docs. #253 and #251, respectively), which were followed by Dish's Reply in Support of Its Motion for Allocation of Sanction Fees (doc. #254). On July 31, 2015, Dish filed a Supplement to Motion for Allocation of Sanction Fees (doc. #261), which prompted additional submissions from Mr. Oertli (doc. #265) and Mr. Groh (doc. #266). This court held a two-hour hearing on the pending motion on September 8, 2015.

         PROCEDURAL BACKGROUND

         The following pertinent facts have been gleaned from the court's file and exhibits

Page 644

proffered by Dish and Mr. Oertli and Mr. Groh in support of their respective positions relative to the pending motion.

         PDX commenced this litigation on June 29, 2012 with the filing of a Complaint (doc. #1) that asserted claims for breach of contract, quantum meruit, negligent representation, breach of the duty of good faith and fair dealing, civil conspiracy, breach of retail agreements, and declaratory relief. Plaintiff contended that after executing an Installment Service Agreement to install satellite television equipment on behalf of Dish, PDX was provided " with Business Rules that deprived [Plaintiff] of the previously promised independence and subjected PDX to control by Dish." See Complaint, at ¶ 9. The Complaint alleged, in part, that

The Business Rules gave DISH unfettered and unreasonable discretion to deny contractors payment for the reasonable value of their services and to impose unnecessarily complicated documentation requirements in order to provide DISH with an excuse for non-payment based on contractors' errors in completing paperwork. The Business Rules obligate contractors to comply with extremely tight timelines to resolve payment issues, even though they purport to allow DISH to go back indefinitely with no time constraints on its efforts to recover from alleged overpayments to its contractors.

Id. at ¶ ¶ 10 and 11.

         Plaintiff initially estimated its damaged at $965,225.32, plus an unknown amount for receivers that PDX purchased from and then returned to Dish. As to the latter category of damages, PDX claimed that it could not quantify its losses more precisely without " complete equipment payment and RA records [from Dish], as well as all retail exchanges and receiver purchase orders by PDX in order to determine how many receivers are involved and exactly what amount, if any, [Dish] owes PDX for them." See Scheduling Order (doc. #33), at 9-10.

         Dish argued, to the contrary, that " the Business Rules at issue here govern, inter alia, payment disputes for labor and equipment" and establish " specific deadlines in which a payment must be disputed and explicit instructions setting forth the manner and method by which to do so." According to Defendant, " [d]espite these unambiguous directions, including warnings that jobs submitted outside [the established] deadlines would be rejected by [Dish], PDX consistently failed to adhere to the Business Rules," which meant that " many of Plaintiff's claims for relief are . . . barred by the Business Rules." Id. at 5.

         Dish served its first set of written discovery on December 14, 2012, including Interrogatory No. 4 which asked PDX to identify all transactions in dispute in this case and to provide detailed information regarding those transactions, including a list of the documents supporting PDX's request for payment on each disputed transaction, and the dates of PDX's compliance with various aspects of the applicable Business Rules between the parties. Plaintiff responded, without objection, to Interrogatory No. 4 on February 11, 2013 by invoking Fed.R.Civ.P. 33(d)[1] and identifying four pages of computer

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hard-drive pathways contained in a hard-drive that PDX did not contemporaneously produce. That interrogatory response was signed by PDX's counsel, Richard Oertli,[2] and verified as " true and complete to the best of his knowledge" by Michael Paxton, PDX's Chief Operating Officer.

         After a series of communications between counsel, Dish challenged the adequacy of PDX's response to Interrogatory No. 4 during a telephone discovery conference with the district judge on June 6, 2013. Dish complained that PDX had produced spreadsheets that reflected all the transactions between the parties, and not specifically the unpaid transactions that formed the bases for Plaintiff's alleged damages. See Transcript of Proceedings on June 6, 2013 (doc. #66), at 8. In response, Plaintiff's counsel advised Judge Jackson that his client did not have " complete data to prove" its damages and needed additional information from Dish.

As I understand it, Your Honor, its mostly work orders that were sent in electronically. And my client doesn't have a complete record of what he sent in electronically, so he can't reconstitute a lot of his claims.

Id. at 10. Judge Jackson directed Dish to " produce all the work orders" and then had the following colloquy with Mr. Oertli:

The Court: And if [Dish does that], then Mr. Oertli, you think you can provide an answer to interrogatory 4 that's complete.
Mr. Oertli: Well, I certainly hope the client can, Your Honor.
The Court: Pardon me?
Mr. Oertli: I suspect the client can, Your Honor. Yes.
The Court: Well, if the client can't produce the information, it's going to be hard for the client to prove its case, isn't it?
Mr. Oertli: It's going to be difficult on that damages theory, yes.

Id. at 12-13. At the conclusion of the June 6, 2013 discovery conference, Judge Jackson directed PDX to provide a complete response to Interrogatory No. 4 by July 15, 2013.[3] Id. at 13. See also Minute Order (doc. #63) of June 6, 2013.

         On July 3, 2013, Mr. Oertli requested that Dish provide work order data in native Excel format, rather than the PDF format contemplated under the parties' January 9, 2013 Scheduling Order (doc. #33). Dish honored that request on July 12, 2013 by providing Mr. Oertli with a thumb-drive containing the requested information. Apparently Mr. Paxton did not receive that data from his counsel until July 16, 2013. Because of that delayed transmittal, Plaintiff's Supplementation of its Computation of Damages; and Related Supplemented

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Responses to Interrogatory No. 4 did not incorporate the very information that Mr. Oertli earlier told Judge Jackson was essential to allow his client to prepare a " complete" response to Interrogatory No. 4. See Exhibit O submitted with Defendant's Exhibits for Hearing on Allocation of Sanction Fees (acknowledging in paragraph 6 of page 2 that " PDX will not know until July 16, 2013, at the earliest, whether it can use the information on the third thumb drive and whether it will need to supplement again its responses regarding its damages and Interrogatory No. 4" ).

         Not surprisingly, Dish believed that Plaintiff's July 15th supplement still failed to provide the detailed information required by Interrogatory No. 4 and did not identify any supporting documentation. Moreover, Dish insisted that PDX actually had been paid for many of the 21,632 transactions referenced in the most recent supplement.

         On September 25, 2013, PDX provided a Second Supplementation of its Computation of Damages; and Related Second Supplemented Responses to Interrogatory No. 4 that referred to 18,079 challenged transactions (down from the prior claim of 21,632 transactions). See Exhibit Q (doc. #88-17) attached to Defendant's Motion to Compel. The Second Supplementation stated that Plaintiff could not provide a complete computation of its damages either because Dish had not provided necessary documentation or PDX lacked essential information in its own files. Plaintiff also asserted that it would " determine with more precision the amount of profits and revenues Dish caused it to lose by its bad faith conduct and punitive actions," once Judge Jackson determined " that PDX can recover loss of profits and revenues, in spite of the unconscionable provision in the Installment Agreement purporting to limit the damages PDX may recover."

         These representations were squarely at odds with Plaintiff's initial response to Interrogatory No. 4. By invoking Rule 33(d), PDX implicitly represented that all of the information requested in that interrogatory could be gleaned through the computer hard-drive pathways previously identified. But see Smith v. Sentinel Insurance Co., Ltd., No. 10-CV-269-GKF-PJC, 2011 WL 2883433, at *2 (N.D. Okl. Jul. 15, 2011) (finding that defendant's initial invocation of Rule 33(d) was improper and that its interrogatory response was " sloppy, evasive, and deceitful," particularly in light of defense counsel's concession (three months later) that the documents in question did not contain the requested information). Cf. In re Lithium Ion Batteries Antitrust Litigation, No. 13-md-0420-YGR (DMR), 2015 WL 4999762, at *2 (N.D. Cal. Aug. 21, 2015) (finding that defendants' reliance on Rule 33(d) was improper given that the referenced documents were plainly incomplete and did not fully contain the information requested in the interrogatory at issue).

         On October 3, 2013, Dish filed a Motion to Compel Plaintiff's Response to Interrogatory No. 4, for Order Requiring Compliance with Prior Order, and for Sanctions (doc. #87). Dish conceded that PDX had produced on September 25, 2013 a new Excel file that identified 8,942 allegedly " unpaid transactions" and 9,137 disputed receivers. Defendant insisted, however, that this spreadsheet still did not cure all the deficiencies in Plaintiff's earlier responses to Interrogatory No. 4.

For example, the over 9,000 receivers on which Plaintiff requests payment are identified only by part number, with no information regarding (a) work order numbers; (b) account numbers; (c) reconciliation type; or (d) return authorization numbers, among other missing information. PDX simply states, " We could not determine on what accounts this receiver was activated on." This is troubling since PDX would have physically installed any of the receivers it could be paid for, and since it should have records containing all of the information sought by [Dish].

See Defendant's Motion to Compel, at 5. Dish argued that " many of the 'unpaid transactions' remain similarly deficient," that PDX continued to list " transactions on which PDX has been paid," and had failed " to identify any documents supporting the payment amounts requested for any of the over 9,000 receivers and for more than 2,000 of the allegedly 'unpaid transactions.'" Id. at 6.[4] In closing its Motion to Compel, Dish argued that PDX should be prohibited " from presenting any evidence regarding any of the transactions for which its response (sic) are deficient either at trial or in response to dispositive motions filed by [Dish]" and that Defendant " be awarded its reasonable attorney fees pursuant to Rule 37(a)(5)(A)."

         In its Response to Defendant Dish's Motion to Compel (doc. #94), PDX maintained that its most recent supplemental response to Interrogatory No. 4 " identified the 'transactions in dispute'" and, indeed, reduced Plaintiff's " claims for damages by $611,934" based on the additional information provided by Dish. PDX also questioned " why a Motion

Page 647

to Compel should be filed for the production of information PDX has repeatedly stated it cannot provide without more data from Dish." Mr. Oertli assured Dish and the court that he had " been instructed by PDX to be an 'open book' and produce everything relevant." Id. at 3.

         At the conclusion of a hearing on October 17, 2013, I directed PDX to provide " a full and comprehensive [Fed. R. Civ. P. Rule] 26(a)(1) disclosure" that included " a computation of your damages by category." See Transcript of Proceedings on October 17, 2013 (doc. #107), at 58. This court also required PDX to " identify each and every document [it] relies upon and intends to use at trial to support [its damages] computation," [5] and to " identify with particularity in [its Rule] 26(a)(1) disclosures those categories of damages for which [PDX] is lacking documentation," [6] with the added warning that these disclosures would be subject to Fed.R.Civ.P. 26(g)'s certification requirement. Id. at 58-59. Counsel was advised not to " let your client send something . . . for which you are not willing to live with the consequences, because under [Rule] 26(g) if I find that a lawyer has failed to comply with their certification requirement," the court would be required to award fees and costs. Id. After Mr. Oertli expressed some uncertainty as to his obligations under Rule 26(g), the court explained that the Rule

does not require the signing attorney to certify the truthfulness of the client's factual responses, rather the signature certifies that the lawyer has a made a reasonable effort to assure that the client has provided all the information and documents available to him that are responsive.

Id. at 60. In closing, the court granted in part and denied in part Dish's motion to compel, and specifically declined to award fees and costs to either side. Id. at 116.

         Also during the hearing on October 17, 2013, Mr. Oertli orally moved to withdraw from his representation of PDX, suggesting that he had " discussed" that prospect several times with his client. Id. at 69. Mr. Oertli explained " the client is unhappy with me" and " [t]he feeling is mutual," but then declined to provide more particularized grounds for his request. Id. at 70. This court stated that it would not consider counsel's motion to withdraw " until all discovery is complete," id. at 70, and " I resolve all of the disputes about written discovery." Id. at 96.

         On October 21, 2013, PDX served its Third Supplementation of its Computation of Damages and Related Third Supplemented Responses to Interrogatory No. 4 (doc. #98). For several categories of damages, PDX once again claimed it could not provide a " total figure" without additional information from Dish. Mr. Oertli closed ...


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