Frederick v. Panda No 1, LLC

          ORDER ADOPTING IN PART THE APRIL 9, 2018 CERTIFICATION AND RECOMMENDATION OF MAGISTRATE JUDGE

          William J. Martínez United States District Judge.

         Plaintiff Terrell Frederick, individually and on behalf of his minor child LF (“Plaintiff”), sued Defendant Panda No. 1, LLC (“Defendant”), for violating the Americans with Disabilities Act (“ADA”), 42 U.S.C. §§ 12101 et seq. This matter is before the Court on the November 16, 2017 Order to Show Cause (ECF No. 70), Defendant's “Motion for Order to Show Cause: Contempt Against Litigation Management & Financial Services, LLC” (“Defendant's Motion”) (ECF No. 85), and the April 9, 2018 Certification on Contempt of Court and Recommendation by United States Magistrate Judge Kathleen M. Tafoya (“Recommendation”) (ECF No. 88). For the reasons set forth below, the Court adopts in part Judge Tafoya's recommendation, imposes modified sanctions, and dismisses Plaintiff's claims with prejudice.

         I. BACKGROUND & PROCEDURAL HISTORY

         This summary is drawn from the Recommendation, the parties' filings in this case, and Plaintiff's response to the Court's Order to Show Cause (ECF No. 92).

         Plaintiff Terrell Frederick filed this lawsuit, and forty-two other separate but nearly identical lawsuits, against forty-three Colorado Springs restaurants and retail establishments alleging violations of the ADA. (ECF No. 88 at 2.) Plaintiff made nearly identical allegations against the establishments, changing only the date of visit and the alleged barriers at each location. (Id.) Plaintiff's daughter has dystonic cerebral palsy, has mobility issues, and uses a service dog. (ECF No. 82-1 at 4.)

         Defendant maintains that it did not violate the ADA and there are no barriers to access. Defendant further contends that these lawsuits were brought to generate settlements and corresponding attorneys' fees that would benefit Litigation Management and Financial Services, LLC (“LitMan”).^[1] (ECF No. 88 at 2.) To support its theory, Defendant sought written discovery and deposition testimony from both Plaintiff and a representative of LitMan about LitMan's role in the litigation. (Id.; ECF Nos. 38-1; 85-2.) When Plaintiff failed to timely respond to Defendant's discovery requests, Defendant filed its first Motion to Compel on August 23, 2017. (ECF No. 38.) Judge Tafoya noted that Plaintiff's counsel had “refused all efforts at conferral.” (ECF No. 88 at 8.) Plaintiff's counsel disputes this characterization, stating that he was willing to engage in communication with Defendant, but “[d]efense counsel may not have liked the responses that he was receiving during these conferrals.” (ECF No. 92 at 7.) Conferral requires more than a mere willingness to communicate; it requires that the parties “compare views, consult together.” See Heinrich v. Master Craft, 2014 WL 2179353, at *1 (D. Colo. May 24, 2014). Plaintiff has not put forward evidence to dispute Judge Tafoya's conclusion that Plaintiff's counsel refused to confer with Defendant regarding discovery responses.

         Plaintiff responded to the Motion to Compel with a single paragraph stating that Plaintiff had (belatedly) “produced his responses to Defendant's discovery requests” as of August 30, 2017. (ECF No. 42.) Judge Tafoya characterized Plaintiff's response as a “direct lie” because no discovery had been produced at that time. (ECF No. 88 at 3.) Again, Plaintiff's counsel resists this characterization. (ECF No. 92 at 8.) He goes on to explain that his belated responses were justified because Defendant took similar liberties with responding to discovery requests. He also perplexingly states that he was “accused of lying to the court for explaining to the court the exact reasons why I was withholding the information, ” suggesting that he had, indeed, provided no or limited information to the Defendant. (Id.) Whatever the merits of Plaintiff's counsel's assertions, two wrongs do not make a right. A review of the record shows that Plaintiff had not produced any documents in response to Defendant's request as of August 30, 2017. However, Plaintiff did not claim to have produced discovery as of that date, but rather “produced his responses” as of that date. (ECF No. 42.) This is technically correct because Plaintiff did respond to Defendant's interrogatories and request for production that day.

         On October 3, 2017, Judge Tafoya held a hearing on outstanding discovery issues. (ECF No. 54 [Minutes]; ECF No. 67 [Transcript].) Plaintiff had objected to and refused to answer even basic questions about the case. (ECF No. 88 at 3.) Because Defendant's requests and interrogatories were straightforward and Plaintiff's objections unsustainable, Judge Tafoya then ordered Plaintiff to provide supplemental responses on or before October 13, 2017. (ECF No. 88 at 4.) Judge Tafoya also awarded Defendant attorneys' fees and costs incurred for bringing the Motion to Compel. (Id.)

         On October 13, 2017, Plaintiff filed notice claiming that he had complied with Judge Tafoya's order to serve amended responses (ECF No. 57). On October 17, 2017, Defendant filed a response noting that Plaintiff's responses were still plagued by deficiencies. (ECF No. 59 at 1-2.) Judge Tafoya reviewed Plaintiff's responses, agreed that they remained deficient, and set another hearing for October 30, 2017. (ECF No. 66 [Minutes]; ECF No. 68 [Transcript].)

         At the October 30, 2017 hearing, Judge Tafoya warned Plaintiff's counsel that the responses were still deficient. Plaintiff's counsel once again raised Defendant's failure to comply with discovery as a reason for Plaintiff's recalcitrance on discovery. (ECF No. 68 at 20.) Judge Tafoya gave Plaintiff a deadline of November 13, 2017 by which to provide “full and complete responses to Defendant's discovery requests, together with unredacted documents.” (ECF No. 66 at 2.)

         On November 14, 2017, Defendant filed a notice that the Plaintiff did not provide additional discovery or a privilege log by November 13, 2017. (ECF No. 69.) Judge Tafoya issued an Order to Show Cause on November 16, 2017 (ECF No. 70), to which Plaintiff responded on November 30 (ECF No. 71). Plaintiff attached unredacted copies of documents to his response to comply with Judge Tafoya's order including (1) the fee agreement between Plaintiff and his counsel; (2) a litigation funding agreement between Plaintiff and LitMan; and (3) a litigation management agreement between Plaintiff's counsel and LitMan. (Id.; ECF No. 71-3.) He also explained that he did not timely comply with Judge Tafoya's order because his computer crashed. (ECF No. 71 at 2-3.) As Judge Tafoya noted, the documents produced were in the possession of LitMan and its employees, so Plaintiff's counsel's computer failure would not have necessarily impacted Plaintiff's ability to timely produce documents. (ECF No. 88 at 5.) Plaintiff's counsel admits that LitMan had the records in its possession, but explains that his attempts to contact LitMan for such information went unanswered. (ECF No. 92 at 9.) Plaintiff also continued to raise Defendant's supposed failure to comply with discovery requirements. (ECF No. 71 at 3.) Plaintiff did not supplement responses to the interrogatories; produce communications between and among Plaintiff, Plaintiff's counsel, and LitMan; or produce a privilege log concerning any communications.

         On November 30, 2017, Plaintiff also filed a Motion to Dismiss Without Prejudice (ECF No. 72), which Defendant opposed (ECF No. 80).

         In early December 2017, Plaintiff sought the Court's assistance in delaying his deposition. (ECF No. 74.) Judge Tafoya found that Plaintiff had set forth no legally cognizable grounds for a stay and that Defendant stated a need, particularly in light of Plaintiff's continued failure to meet his discovery obligations. (ECF No. 77.)

         Plaintiff's deposition revealed information about how the case had been prepared and litigated, and the division of work among Plaintiff, Plaintiff's counsel, and LitMan. Plaintiff's former co-worker Emily Branch asked Plaintiff if he would be interested in getting involved in ADA cases because of his daughter's disability. (ECF No. 82-1 at 5.) Plaintiff would be paid $50 initially, and $50 after an additional period of time per case. (Id. at 5.) Plaintiff agreed and LitMan provided him with a copy of the ADA rules, a measuring instrument, forms to fill out for each establishment, and an iPad with electronic forms. (Id. at 10-13.)

         Plaintiff had correspondence with LitMan concerning his contract with LitMan, the violations at establishments, and the payments, but had never been asked to collect or produce the documents. (Id. at 7, 35.) Indeed, Plaintiff testified that the first time he had seen Defendant's First Set of Discovery Requests (dated June 30, 2017) was a week before his deposition (on December 8, 2017) when Emily at LitMan emailed him. Similarly, he had not seen Plaintiff's responses to those requests, or signed those responses. (Id. at 34.) Plaintiff also had not previously seen the November 13, 2017 Order to Show Cause. (Id. at 8.) He was also unaware of any settlement proposals or settlements in connection with the 43 cases filed. (Id. at 15, 17-18, 26.)

         LitMan put Plaintiff in touch with Plaintiff's counsel. (Id. at 18.) Plaintiff also explained that LitMan was responsible for paying Plaintiff's counsel, and that Plaintiff had no obligation to pay his counsel. (Id. at 10.) Plaintiff was not informed that he could be responsible for Defendant's fees or costs, or that Judge Tafoya had ordered attorneys' fees to be paid by Plaintiff and Plaintiff's counsel. (Id. at 33.) The prior award of sanctions to Defendant was apparently paid from Plaintiff's counsel's trust or operating account. (Id.)

         Both Plaintiff and Plaintiff's counsel eventually realized LitMan's interest diverged from Plaintiff's interest. (ECF No. 92 at 7, 10.) Plaintiff and his counsel “believe that they were intentionally deceived by Lit[M]an, which became exceedingly obvious . . . after the deposition of Mr. Frederick.” (Id. at 10.)

         On December 18, 2017, Defendant served LitMan with a subpoena pursuant to Rule 45 and a Rule 30(b)(6) deposition notice for January 2, 2018 at 9:00 a.m. (ECF No. 85-2; ECF No. 85-3.) LitMan failed to appear and testify on January 2, and failed to produce any documents pursuant to the subpoena or otherwise respond. (ECF No. 85-4.) LitMan did not move to quash or modify the subpoena or otherwise file any document to protest the deposition or document requests. LitMan failed to set forth any legal basis to quash the subpoena, and thus under Rule 45 was required to comply with it. Defendant thereafter sought to hold LitMan in contempt of court by filing a motion for an order to show cause as to why LitMan should not be held in contempt. (ECF No. 85.) The undersigned referred the motion to Judge Tafoya for a recommendation.

         Judge Tafoya recommended holding Plaintiff, Plaintiff's counsel, and LitMan in contempt of court for failure to comply with her prior orders. She also recommended imposing sanctions on Plaintiff, Plaintiff's counsel, and LitMan. Judge Tafoya also certified facts supporting a finding of contempt pursuant to 28 U.S.C. § 636(e)(6). The Recommendation is incorporated herein by reference. See 28 U.S.C. § 636(b)(1)(B); Fed.R.Civ.P. 72(b). Specifically, Judge Tafoya found that LitMan was “obviously controlling the litigation nominally brought by [Plaintiff]” and was in the best position to provide the discovery requested. (ECF No. 88 at 11.) Judge Tafoya recommended the following sanctions:

1. Hold Plaintiff, Plaintiff's counsel, and LitMan in contempt for their “clear defiance” of the October 3, 2017 and October 30, 2017 orders directing ...