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May 23, 1984


The opinion of the court was delivered by: Decker, Senior District Judge.


I. Introduction

This antitrust case is before the court on a number of motions. Plaintiff, Mr. Frank, Inc., (Mr. Frank) moves for sanctions under Fed.R.Civ.P. 37 and for other relief for the failure of defendant, Waste Management, Inc. (WMI), to comply with discovery orders. WMI moves to dismiss the complaint, for summary judgment, to strike certain allegations, and for sanctions under Fed.R.Civ.P. 11.

II. Factual Background

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 approximately $140,000.

III. Discussion

A. Motion for Rule 37 Sanctions and Other Relief

Mr. Frank moves for sanctions because WMI failed to provide six documents requested in connection with three depositions.*fn1 The depositions took place within a court-ordered time limit for discovery on the motion to dismiss and for summary judgment.

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 ...

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