The opinion of the court was delivered by: Decker, Senior District Judge.
MEMORANDUM OPINION AND ORDER
WMI hauls, treats, stores, and disposes of industrial waste and
has a large share of the disposal market in northern Illinois.
See Second Amended Complaint ¶ 22 at 7. Mr. Frank transports
industrial wastes in that region and is thus both a customer and
a competitor of WMI. Mr. Frank alleges, and WMI does not dispute,
that for the purposes of this suit the relevant geographic market
is those portions of Illinois, Indiana, Wisconsin, and Michigan
within 150 miles of Cook County. See id. at ¶ 20 at 6.
WMI acquired control of Chem-Nuclear, Inc. (Chem-Nuclear) in
July, 1982. Chem-Nuclear also transports, treats, and stores
various types of waste. Chem-Nuclear has two subsidiaries, Chem
Securities Systems, Inc. (CSSI) and Chem Resource Recovery of
Indiana, Inc. (CRRI).
CSSI acquired an option to purchase a waste disposal facility
in Grand Rapids, Michigan (the Grand Rapids facility) in 1980. In
May, 1981, CSSI exercised its option but delayed closing on the
sale. CSSI assumed control of the site under an "Operating
Agreement" in July, 1981 from Cascade Resource Recovery, Inc.
(Cascade). Also in July, CSSI loaned Cascade approximately $1.8
million for improvements at the Grand Rapids facility. WMI
thereafter acquired Chem-Nuclear and, therefore, its subsidiary
CSSI. CSSI then lent Cascade an additional $400,000. Cascade
still owes CSSI all or a substantial portion of the loans.
CSSI informed Cascade in December, 1982 that it was canceling
the option and operating agreements. Cascade's owners sued in
Michigan state court to enforce those agreements and secured a
temporary restraining order against the cancellation. CSSI and
Cascade later reached a "handshake deal" for the return of the
operation of the facility to Cascade. CSSI remains the registered
operator of the site with the Michigan Department of Natural
Resources (MDNR). The Grand Rapids facility closed in March,
1983. It apparently remains closed today.
In May, 1982, before WMI acquired them, CSSI and CRRI entered
into similar option and operating agreements with Continental
Waste Systems, Inc. (Continental) with respect to Continental's
waste disposal facilities in Fort Wayne, Indiana (the Fort Wayne
facilities). CRRI and CSSI terminated those agreements after WMI
acquired their parent corporation, Chem-Nuclear. CSSI and CRRI
now own only a right of first refusal with respect to any offer
to purchase a 50% or greater interest in one of the Fort Wayne
facilities (the Clinton Street facility).
Chem-Clear, Inc. (Chem-Clear) is a waste disposal and treatment
company with facilities in Illinois, Ohio, Pennsylvania, and
Maryland. A large percentage of Mr. Frank's business consists of
transporting waste to Chem-Clear's Chicago site. WMI and
Chem-Clear negotiated extensively over the possible acquisition
by WMI of all or some of Chem-Clear's facilities. WMI's only
present interest in Chem-Clear is that Chem-Clear owes WMI
A. Motion for Rule 37 Sanctions and Other Relief
The first document is a letter from Leonard Tinnan (Tinnan),
WMI's Director of New Business Development, to Christy Bell
(Bell), Chem-Clear's Chairman of the Board, dated January 4, 1983
and concerning the preliminary injunction motion which Mr. Frank
filed in December, 1982 to prevent WMI from acquiring Chem-Clear.
Attached to the letter is a copy of a letter from Joseph Giffin
(Giffin), WMI's counsel, about the preliminary injunction motion
and a copy of the motion itself. Exhibit B to Plaintiff's Motion
for Rule 37 Sanctions. The second document is a memorandum from
Jim Koenig (Koenig) of WMI to Milo Harrison (Harrison), the
president of a WMI subsidiary, summarizing the pros and cons of
acquiring Chem-Clear and recommending that WMI not proceed with
the acquisition. Exhibit B to Plaintiff's Reply Memorandum in
Support of Rule 37 Motion. The third is a December 9, 1982
analysis by Harrison of the proposed acquisition of Chem-Clear
and includes a possible purchase price. Exhibit D to id. The
fourth document is an undated, unsigned memorandum setting forth
possible "approaches" to the acquisition of Chem-Clear, including
the acquisition of an interest in Chem-Clear's Chicago facility.
Exhibit F to id. The fifth is a more detailed analysis of
"approach" # 4, the acquisition of only the Maryland and
Pennsylvania Chem-Clear sites. Exhibit G to id. The sixth is
Chem-Clear's internal 1983 forecast and is dated December 27,
1982. Exhibit H to id.
Mr. Frank noticed Tinnan's deposition on May 13, 1983 and
attached a broad request for the production of documents pursuant
to Fed.R.Civ.P. 34. Exhibit A to Plaintiff's Motion for Rule 37
Sanctions. Tinnan produced several documents but did not produce
any of those listed above. On May 24, Mr. Frank noticed the
depositions of Dean Buntrock (Buntrock), WMI's president and
chairman of the board, and of Harrison, and attached document
requests identical to that which accompanied Tinnan's notice of
depositions.*fn2 WMI objected to the Buntrock deposition but the
court ordered on June 2, 1983 that it go ahead. The court allowed
Mr. Frank's counsel to ask Buntrock about WMI's proposed
acquisitions of Chem-Clear facilities outside the market relevant
to this suit. The court did not, however, order the production of
documents. Neither the parties nor the court discussed the
production of documents at the June 2nd hearing.
The Buntrock and Harrison depositions proceeded on June 6, 1983
but neither produced any documents. Mr. Frank presented a motion
to compel production of the requested documents on June 8, 1983.
WMI objected to producing documents relating to the acquisition
of the facilities outside the relevant market and filed an
affidavit by Giffin in connection with that objection. The court
ordered the documents to be produced and WMI has complied with
that order. Mr. Frank filed its motion for sanctions because WMI
did not produce the six documents listed above until after the
June 8 hearing.
Mr. Frank cannot secure sanctions under Fed.R.Civ.P. 37(b).
That rule provides for sanctions for failure "to obey an order to
provide or permit discovery. . . ." The only order this court
entered with respect to the production of documents is the June
8 order with which WMI complied.
Fed.R.Civ.P. 37(d) allows the court to impose sanctions absent
disobedience of a court order. The court may do so if a party
fails to make a written response to a proper Rule 34 request
within 30 days. Charter House Ins. Brokers v. New Hampshire Ins.,
667 F.2d 600, 604 (7th Cir. 1981). WMI produced the documents
from Harrison's and Buntrock's files within thirty days of the
request on May 24. WMI did not produce some of those from
Tinnan's until sometime after June 13. WMI thus violated Rule
37(d) unless it made a "written response" with respect to
the Tinnan documents not produced before June 13.
WMI's only such written response before turning over the
documents June 15-17 was Giffin's affidavit of June 6, 1983.
Exhibit I to Plaintiff's Motion for Rule 37 Sanctions. That
affidavit concerns only WMI's objections to the production of
documents which relate to WMI's proposed acquisition of
Chem-Clear's facilities in Pennsylvania and Maryland. Id. It does
not address WMI's failure to produce documents which relate to
the proposed acquisition of any interest in Chem-Clear's Chicago
facilities. As to those documents, therefore, WMI made no
"written response" to the request for the Tinnan documents until
after June 13.
The court hesitates to punish WMI severely for the delay.*fn3
"It is well settled that a district judge should tailor the
choice of sanction to the severity of the misconduct." Charter
House Ins. Brokers v. New Hampshire Ins., 667 F.2d at 605. The
document request was a broad one and WMI was only a few days
late. Furthermore, Mr. Frank would be no better off if WMI had
complied with the rules and produced the documents on June 12.
The documents still would not have been available for the
depositions. Under these circumstances the court chooses to
impose no sanctions.
Mr. Frank is nevertheless entitled to ask Tinnan, Buntrock, and
Harrison about the documents that were produced after their
depositions. The court grants Mr. Frank thirty days to do so.
Those depositions are to be limited strictly to questions about
the documents produced by WMI after the previous depositions. The
court further directs the parties to ...