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U.S. Commodity Futures Trading Commission v. Gramalegui

United States District Court, D. Colorado

August 28, 2017

U.S. COMMODITY FUTURES TRADING COMMISSION, Plaintiff,
v.
GREGORY L. GRAMALEGUI, Defendant.

          ORDER OVERRULING OBJECTIONS TO RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

          ROBERT E. BLACKBURN UNITED STATES DISTRICT JUDGE

         The matter before me is Defendant's Objections to Magistrate's [sic] Regarding the CFTC's Two Motions [ECF #s 110 & 154] for Sanctions for Defendant's Discovery Violations Pursuant to Rule 37(b)(2)(A) [#257], [1] filed July 7, 2017, which objects to the magistrate judge's Recommendation Regarding the CFTC's Two Motions (ECF #s 110 & 154) for Sanctions for Defendant's Discovery Violations Pursuant to Rule 37(b)(2)(A) [#238], filed June 14, 2017. Although styled as a “recommendation, ” because the magistrate judge suggests the imposition of purely non-dispositive sanctions, the order comes with the purview of Rule 72(a) rather than Rule 72(b). See Gomez v. Martin Marietta Corp., 50 F.3d 1511, 1519-20 (10th Cir. 1995).[2] Thus, I may modify or set aside any portion of the order which I find to be clearly erroneous or contrary to law. Fed. R. Civ. P. 72(a). See also Ocelot Oil Corp. v. Sparrow Industries, 847 F.2d 1458, 1463 (10th Cir. 1988) (under clearly erroneous standard, court will affirm unless “on the entire evidence” it “is left with the definite and firm conviction that a mistake has been committed”) (citations and internal quotation marks omitted). I find no such error in relation to the magistrate judge's determinations as to either of these motions.

         The substance of the magistrate judge's order, and of defendant's corresponding objections, addresses the more than 2, 500 emails defendant produced to the Commission in October 2016, just before the close of discovery. Although the Commission had requested such documents some two years prior during the investigative phase of this proceeding, and moved as early as May 2016 to compel defendant to provide them. Defendant repeatedly insisted he had produced all responsive documents in his possession. More than a year ago, the magistrate judge found otherwise and ordered defendant to specify, inter alia, all email accounts he used, noting defendant had failed to disclose at least three email accounts. (See Order Regarding Plaintiff's Motion To Compel, et al. at 3, 5 [#67], filed July 28, 2016.)[3]Included expressly in that listing was the email account from which the late-produced emails were produced.

         Against this backdrop, defendant's claim that he serendipitously found these emails some three months after the magistrate judge ordered him to produce them, just as the discovery period was sunsetting, strains credulity. I discern no error, much less clear error, in the magistrate judge's conclusion that defendant's protestations of innocence in this regard are feckless. The magistrate judge's finding that defendant willfully failed to comply with his discovery obligations is more than amply supported by his actions in this instance and throughout the prosecution of this case, as amply shown by the record. The magistrate judge has come by his evident exasperation with defendant's behavior honestly. The magistrate judge has been in the trenches, ably assisting the court in resolving the repeated, difficult, and time-consuming discovery disputes that have plagued this litigation. Even a relatively superficial reading of the cold record demonstrates defendant's reputation for dilatoriness, obsfucation, and dissembling in his approach to discovery in this case is well-earned.[4] The magistrate judge certainly was permitted to consider the entirety of defendant's recalcitrant behavior in deciding whether - and what type of - sanctions were appropriate.[5]

         The existence of that same discretion undermines defendant's argument that monetary sanctions cannot be imposed because the Commission only sought such sanctions with respect to its first motion to compel, which did not address the email dump (which occurred only after the motion had been filed). I reject this hypertechnical parsing of the duties imposed by - and the court's authority to sanction the violation of a party's duties under - the Federal Rules of Civil Procedure. Rule 37(b)(2)(A) gives the court a broad arsenal of tools to address a party's failure “to obey an order or permit discovery.” These include (but are not limited to) monetary sanctions. See Fed. R. Civ. P. 37(b)(2)(C).[6] Nothing in the rule limits a court from employing a sanction appropriately tailored to the nature and scope of the discovery violation it has found. It certainly could have been no surprise to defendant that monetary sanctions were on the table, since the Commission requested them in connection with a related discovery motion. I therefore find no error in the magistrate judge's determination that defendant should be required to pay the Commission's reasonable attorney fees and costs incurred in bringing these two discovery motions.

         THEREFORE, IT IS ORDERED as follows:

         1. That the magistrate judge's Recommendation Regarding the CFTC's Two Motions (ECF #s 110 & 154) for Sanctions for Defendant's Discovery Violations Pursuant to Rule 37(b)(2)(A) [#238], filed June 14, 2017, is approved and adopted as an order of this court;

         2. That the objections raised in Defendant's Objections to Magistrate's [sic] Regarding the CFTC's Two Motions [ECF #s 110 & 154] for Sanctions for Defendant's Discovery Violations Pursuant to Rule 37(b)(2)(A) [#257], filed July 7, 2017, are overruled;

         3. That The CFTC's Motion Pursuant to Rule 37(b)(2)(A) for Defendant's Failure To Obey a Discovery Order and Incorporated Memorandum of Law [#110], filed October 21, 2016, is granted;

         4. That The CFTC's Second Motion Pursuant to Rule 37(b)(2)(A) for Defendant's Failure To Obey a Discovery Order [#154], filed February 1, 2017, is granted;

         5. That the Commission may use the emails disclosed in November 2016 for any purpose at trial and that defendant may not make any evidentiary objections to their use;

         6. That the Commission shall be awarded the reasonable attorney fees and costs incurred in bringing these two discovery motions; and

         7. That as previously ordered by the magistrate judge, defendant shall have until September 11, 2017, to respond to The CFTC's Calculation of Costs in Accordance with ...


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