McFadden v. Meeker Housing Authority

          ORDER DISCHARGING ORDER TO SHOW CAUSE AGAINST MR. STEPHEN L. BAITY

          William J. Martinez United States District Judge

         Plaintiff Megan McFadden previously resided in the federally subsidized Karen Court apartment complex in Meeker, Colorado. Plaintiffs Lonnie and A.J. White also previously resided in Karen Court. All Plaintiffs claim that Defendants discriminated against them in violation of § 504 the Rehabilitation Act of 1973 (“Rehabilitation Act” or “§ 504”), 29 U.S.C. § 794, and the Fair Housing Act (“FHA”), 42 U.S.C. §§ 3601 et seq., based on Defendants' policy barring them from keeping therapy pets in their Karen Court apartments absent onerous conditions. Plaintiffs originally sued Meeker Housing Authority (“MHA”) and various individual defendants, but through voluntary dismissals and summary judgment, the only remaining defendant is MHA. (See ECF Nos. 242, 244, 443.)

         After two-and-a-half years of discovery disputes, accusations of wrongdoing, and near-constant motion practice, the parties have reached a settlement that “will finally and fully resolve all remaining claims in this action.” (ECF No. 498.) Independent of that settlement, however, is an outstanding Order to Show Cause why one of Defendants' former attorneys, Mr. Stephen L. Baity, should not be required to pay certain costs and fees Plaintiffs incurred as part of particular discovery efforts that yielded documents MHA should have produced through its own efforts. See McFadden v. Meeker Hous. Auth., 2018 WL 3348882 (D. Colo. July 9, 2018) (ECF No. 376). The Court has reviewed Mr. Baity's response. (ECF Nos. 398-99.) As the Court will explain below, the unique timeline of the relevant discovery dispute demonstrates that Mr. Baity did not act sanctionably. The Order to Show Cause will therefore be discharged.

         I. LEGAL STANDARD

         The Court's order to show cause arose from Mr. Baity's apparent failure to supervise his clients' discovery efforts. (ECF No. 376 at 11, 12.)^[1] The basis for sanctions in such a situation is Federal Rule of Civil Procedure 26(g):

(1) Every disclosure under Rule 26(a)(1) or (a)(3) and every discovery request, response, or objection must be signed by at least one attorney of record in the attorney's own name . . . . By signing, an attorney . . . certifies that to the best of [his or her] knowledge, information, and belief formed after a reasonable inquiry:

(A) with respect to a disclosure, it is complete and correct as of the time it is made . . . .

(3) If a certification violates this rule without substantial justification, the court, on motion or on its own, must impose an appropriate sanction on the signer, the party on whose behalf the signer was acting, or both. The sanction may include an order to pay the reasonable expenses, including attorney's fees, caused by the violation.

         Commenting on this rule, the Advisory Committee on Rules of Civil Procedure stated that

[t]he duty to make a “reasonable inquiry” is satisfied if the investigation undertaken by the attorney and the conclusions drawn therefrom are reasonable under the circumstances. It is an objective standard similar to the one imposed by Rule 11. In making the inquiry, the attorney may rely on assertions by the client and on communications with other counsel in the case as long as that reliance is appropriate under the circumstances. Ultimately, what is reasonable is a matter for the court to decide on the totality of the circumstances.

Rule 26(g) does not require the signing attorney to certify the truthfulness of the client's factual responses to a discovery request. Rather, the signature certifies that the lawyer has made a reasonable effort to assure that the client has provided all the information and documents available to him that are responsive to the discovery demand.

         Fed. R. Civ. P. 26 advisory committee's note to 1983 Amendments (citations omitted).

         The Court need not find bad faith to find a Rule 26(g) violation. St. Paul Reinsurance Co. v. Commercial Fin. Corp., 198 F.R.D. 508, 516 (N.D. Iowa 2000). However, “[a]s with Rule 11 sanctions, the court must avoid hindsight and resolve all doubts in favor of the signer.” Bergeson v. Dilworth, 749 F.Supp. 1555, 1566 (D. Kan. 1990).

         Rule 26(g) disputes may be resolved on a summary record. See Fed. R. Civ. P. 26 advisory committee's note to 1983 Amendments (“To prevent the proliferation of the sanction procedure and to avoid multiple hearings, discovery in any sanction proceeding normally should be permitted only when it is clearly required by the interests of justice.”).

         II. FACTUAL FINDINGS

         Drawing from the entire record in this case, including Mr. Baity's response, the Court makes the following factual findings.

         A. Early Interactions with MHA

         Plaintiffs filed this lawsuit on September 13, 2016. Mr. Baity, who is based in Denver, made the approximately 4.5-hour drive to Meeker on October 5, 2017, and there met with Stacie Kincher, who was MHA's executive director and property manager at Karen Court-and who was, at the time, also an individual defendant in this lawsuit. (ECF No. 398-1 ¶ 14.) Mr. Baity explained the litigation process and instructed Kincher to preserve documents and information that might be relevant to the case. (Id. ¶ 15.) In subsequent phone calls with Kincher (and sometimes other individual defendants) on October 10, 13, and 19, and November 1, 2016, Mr. Baity discussed the defendants' discovery obligations and the importance of searching diligently for responsive documents. (Id. ¶¶ 17-20, 22.)

         Through these meetings, Mr. Baity discerned that Kincher “was the person most familiar with MHA's day-to-day operations, and that she conducted all of MHA's business on a single computer located at the MHA offices.” (Id. ¶ 25.) Given Kincher's role as executive director and her familiarity with day-to-day operations, Mr. Baity and his paralegal, Ms. Tia Andrews Beeby, relied on Kincher as the “point person at MHA for searching for and gathering relevant documents responsive to Plaintiffs' discovery requests. . . . Ms. Kincher was familiar with the computer's contents, and in the best position to conduct searches on that computer for information relevant to the lawsuit.” (Id. ¶ 26; see also ECF No. 398-56 ¶ 14.)

         B. First Disputes

         Plaintiffs and MHA exchanged their Rule 26(a)(1) disclosures and began serving written discovery requests in the normal course. The first inkling of a discovery dispute in the record is a December 20, 2016 letter from one of Plaintiffs' attorneys, Ms. Laura Wolf, to Mr. Baity, asserting that MHA's initial disclosures were inadequate compared to MHA's affirmative defenses and counterclaims, and demanding that MHA supplement its disclosures with supporting documents. (ECF No. 301-1.) Similar letters followed on March 6, 2017 (ECF No. 301-2), and April 14, 2017 (ECF No. 301-3). The April 14 letter also emphasized Plaintiffs' Rule 34 request for production #14 (“RFP-14”), which Plaintiffs had previously served. (Id. at 2.) RFP-14 sought communications between MHA and two government agencies, the U.S. Department of Housing & Urban Development (“HUD”) and the Colorado Housing & Finance Authority (“CHFA”). MHA had responded that it “has not had communications with HUD or CHFA” responsive to RFP-14, and Ms. Wolf asserted, without elaboration, that “Plaintiffs have every reason to believe that this unverified statement is inaccurate.” (Id.)

         C. Allegations of Missing and Altered Documents

         By letter to Mr. Baity dated May 18, 2017, Ms. Wolf raised new discovery concerns. (ECF No. 301-7.) Ms. Wolf had reviewed documents disclosed by MHA and noted that those documents referenced or implied the existence of other documents not disclosed. (Id. at 1.) Ms. Wolf therefore requested disclosure of those other documents (e.g., “Ms. Kincher's email to Mr. McKenzie prompting the email found at [the document Bates-labeled] MHA 122”; “Slideshow attachment referenced in MHA 177-178 as well as the undisclosed page 3”). (Id.)

         In the same letter, Ms. Wolf announced that Plaintiffs had “reason to believe that a number of documents [produced by MHA] in this case have been altered, back-dated, or are otherwise inauthentic.” (Id. at 2.) Ms. Wolf provided the Bates numbers for the documents in question. (Id.) No. party has directly described to the Court what those documents are, but the Court has gleaned from later filings that Plaintiffs were disputing the authenticity at least of violation notices allegedly served on Plaintiffs by MHA, and of photographs allegedly showing the filthy state of Plaintiff McFadden's apartment upon move-out. (See ECF No. 288 at 11-16.) Ms. Wolf requested “to inspect the devices on which [the disputed] documents were created and produced in order to obtain metadata by which to determine the documents' creation dates and authenticity . . . . Please provide us with dates in June 2017 on which our forensic team can inspect the devices.” (ECF No. 301-7 at 2.)

         By letter to Mr. Baity dated May 22, 2017, Ms. Wolf transmitted supplemental disclosures, including

a lengthy packet of information dated January 23, 2012 that former MHA Board member Robert Barr provided directly to [then-]Defendants Buckler, George, and Parker . . . . These documents establish that MHA Defendants have been on notice since at least January 2012 of their duties under federal law with respect to the provision of reasonable accommodations relating to assistance animals.

         (ECF No. 301-5 at 1.) Ms. Wolf declared it “incredibly troubling that MHA Defendants never disclosed this document to Plaintiffs, ” and likened it to the RFP-14 dispute over communications between MHA and HUD/CHFA. (Id.) Ms. Wolf referenced MHA's “fail[ure] to disclose the e-mails exchanged between Mr. McKenzie [MHA's outside consultant on fair housing requirements] and CHFA [regarding matters pertaining to the events at issue in the lawsuit].” (Id.) At some point-it is unclear precisely when- Plaintiffs themselves obtained these McKenzie-CHFA e-mails through requests directly to CHFA. (See ECF No. 190 at 1-2.) Ms. Wolf also re-raised MHA's failure to disclose information supporting its defenses and counterclaims. (ECF No. 301-5 at 1.)

         The next day (May 23, 2017), Plaintiffs disclosed more e-mails between McKenzie and CHFA that Plaintiffs had obtained through their own efforts. (See ECF No. 301-6.) In the cover letter accompanying that disclosure, Ms. Wolf also highlighted a separate document (apparently already disclosed) that references an e-mail between HUD and Kincher. (Id. at 1.) Ms. Wolf pointed out that such an e-mail would be responsive to Plaintiffs' discovery requests but had never been disclosed. (Id.)

         On May 25, 2017, Mr. Baity responded to Ms. Wolf's May 18, 2017 letter. (See ECF No. 399-43.) As to the various documents that supposedly implied the existence of other documents, Mr. Baity variously responded that no additional documents exist, that MHA was still searching, or that responsive documents had already been disclosed. (Id. at 2-3.) As for Plaintiffs' request to forensically inspect MHA's digital devices, Mr. Baity “object[ed] to this request to the extent that it is overbroad and unduly burdensome. Plaintiffs' allegation that documents have been ‘altered, back-dated, or are otherwise inauthentic' is unfounded.” (Id. at 3.)

         D. First Hearing Before Judge Gallagher and the Forensic Protocol

         The parties presented their discovery disputes (including several disputes not mentioned above, which are irrelevant for present purposes) to U.S. Magistrate Judge Gordon P. Gallagher in a hearing held on June 6, 2017. (See ECF No. 167.) Regarding the RFP-14 dispute, Judge Gallagher called for briefing on whether the RFP's demand for communications between MHA and HUD/CHFA imposed an obligation on MHA to look for communications between McKenzie and those entities. (Id. at 1.) As for “looking at meta-data in documents, and only those documents, listed in a letter from Plaintiffs to Defendants dated May 18, 2017, ” Judge Gallagher announced that the parties were going to further confer. (Id. at 2.) Thus, that dispute was “continued to such time as the parties have further need of the court's assistance.” (Id.)

         The next day (June 7, 2017), Ms. Wolf sent an e-mail to Mr. Baity that appears to be part of the ongoing conferral Judge Gallagher noted. (ECF No. 399-44.) She relisted the Bates numbers of the documents in question, and added an additional document to that list. (Id. at 2.) The additional document was an e-mail that appears to have an attachment, but Mr. Baity had previously represented “that no attachment can be found.” (Id.) In that light, Ms. Wolf “request[ed] to inspect this email [also].” (Id.)

         On June 12, 2017, Plaintiffs submitted a brief to Judge Gallagher regarding the RFP-14 question. (See ECF No. 190 at 12.) Plaintiffs argued that when McKenzie was communicating on MHA's behalf, he was acting as MHA's agent and therefore MHA should be considered in the possession, custody, or control of those e-mails between McKenzie and HUD or CHFA. (Id. at 4-8.) Plaintiffs also cited the January 2012 packet they had obtained from Barr (the former board member) and the attachment-less e-mail as evidence of MHA's supposed unwillingness to search for responsive documents. (Id. at 8-10.)

         That same day, the parties conferred in person over their various disputes. (ECF No. 398-1 ¶ 42.) Concerning Plaintiffs' desire to forensically inspect digital files, Mr. Baity apparently withdrew his opposition and agreed to provide “[d]ates in July” for such inspection, while Ms. Wolf agreed to “provide the protocol for [Plaintiffs'] forensic experts' inspection.” (ECF No. 399-45 at 2.)

         Another of Plaintiffs' attorneys, Mr. Siddartha Rathod, sent that protocol by e-mail to Mr. Baity on June 21, 2017. (ECF No. 399-46.) In the protocol, Forensic Pursuit (Plaintiffs' digital forensics vendor) requested that it be permitted to create a bit-for-bit complete image of the MHA computer's hard drive so Forensic Pursuit could “examine deleted space and system files . . . to compare [each] document's changes over time.” (Id.) Mr. Baity agreed to this protocol. (ECF No. 398-1 ¶ 123.)

         E. Allegations of Withheld Documents and Second Hearing ...