The opinion of the court was delivered by: Schenkier, United States Magistrate Judge.
MEMORANDUM OPINION AND ORDER
The Rules of Civil Procedure — including those governing
discovery — seek to promote "the just, speedy, and inexpensive
determination of every action." Fed. R.Civ.P. 1. However, it is
painfully obvious to litigants and courts that disputes over
discovery can render this goal illusory. Whether through
over-reaching by the party seeking discovery or recalcitrance by
the party responding to discovery requests (or sometimes both),
needless discovery disputes all too often disrupt the progress of
a lawsuit, inflict additional expense on the parties, and require
judicial attention that would be far better spent on addressing
the merits of parties' disputes.
This case presents an example of just such a needless and
unproductive discovery dispute. This dispute, which has led to
substantial motion practice and discovery totally unrelated to
the merits of the case, is the direct result of the defendants
choosing to respond to legitimate discovery requests with
deception rather than directness.
Illinois Tool Works, Inc. has filed a motion seeking sanctions
and for a rule to show cause why defendants should not be held in
contempt (doc. # 36) for violation of an Order of October 23,
1998 requiring that all the defendants "preserve the integrity of
all computers that are issue here without any spoilation of any
information contained therein" (10/23/98 Tr. at 4, cited in
Pl.Mem., Ex. C).*fn1 In particular, plaintiff asserts this order
was violated in connection with a Packard Bell computer in the
possession of defendants, which failed to operate when produced
for inspection just six days after the preservation order despite
functioning properly a few days
earlier. Plaintiff originally sought the ultimate sanction of a
default judgment against defendants (Pl.Mem.1-2), but then
withdrew that request in light of the subsequent disclosure that
apparently no responsive documents existing on the computer had
been destroyed (Pl.Reply Mem. 1). Plaintiff still seeks a panoply
of other sanctions: (1) attorneys' fees and costs incurred as a
result of having to subpoena documents from third-parties that
should have been produced by defendants; (2) the fees and costs
of plaintiff's computer expert; (3) plaintiff's attorneys' fees
and costs associated with the document depositions; and (4)
plaintiff's attorneys' fees and costs associated with its motion
for sanctions. For their part, defendants deny that plaintiff is
entitled to any relief, since no documents on the computer were
actually destroyed. In addition, defendants have countermoved for
sanctions against plaintiff (doc. # 45), arguing that plaintiff's
motion was knowingly baseless.
By an Order dated February 24, 1999, this matter was referred
to this Court for ruling on plaintiff's motion (and now
defendants' counter-motion). In connection with these motions,
the parties have conducted investigation and discovery, much of
which is attached as exhibits to their legal memoranda. Plaintiff
has twice deposed Thomas C. Heinzel, defendants' custodian of
records; each side has retained computer experts, who have
submitted reports or declarations and have also been deposed at
length; and defendants also have offered affidavits of Mr.
Heinzel and Mark Pavliny. At a status hearing on April 14, 1999,
the parties agreed that the ample paper record submitted provides
a sufficient basis for this Court to decide the motions, without
the need for in-court testimony.
The Court has now fully reviewed all the materials submitted by
the parties in connection with the pending motions. After careful
consideration, the Court grants plaintiff's motion for sanctions,
and denies defendants' counter-motion for sanctions.
The Court begins its discussion by setting forth its findings
concerning the facts relevant to the pending motions.
A. The Discovery Requests in Issue.
Plaintiff is in the business of selling hot stamp and thermal
imprinting machines, as well as parts and consumable supplies
used with those machines. Two of the individual defendants,
Thomas C. Heinzel and Mark Pavliny, formerly were employed by the
plaintiff, and thereafter were employed by or otherwise
associated with the corporate defendants (Compl. ¶¶ 8-9).
Plaintiff alleges that the corporate defendants, Metro Mark
Products, Ltd., Metro Mark Products, and Horizon Marking Systems,
Inc., sell these same products in direct competition with
plaintiff (Id., at ¶ 56). Plaintiff alleges, among other
things, that the individual and corporate defendants
misappropriated plaintiff's trade secrets, including plaintiff's
customer list (Id., at ¶ 55). Plaintiff alleges that the
defendants have violated the Lanham Act, 15 U.S.C. § 1125(a), as
well as Illinois statutory and common law.
On September 4, 1998, plaintiff served a request for production
of documents (Pl. Mem., Ex. A). The document request did not
specifically request "invoices," but more broadly sought
production of categories of documents that would plainly include
invoices. E.g., Request No. 6 ("each document which refers,
relates to or comments upon . . . the manufacture, assembly, sale
or service of any product or part by any of the defendants");
Request No. 7 ("all documents that refer, relate to, comment upon
or constitute any communication . . . between any of the
defendants and any third parties, regarding hot stamp or thermal
transferring printing equipment and/or parts and/or consumables
thereof"); Request No. 10 ("all documents that refer, relate to,
comment upon or identify customers of any defendant which were
provided with or are using hot stamp
or thermal transfer and printing equipment and/or parts and/or
consumables thereof"); Request No. 13 ("all customer lists for
any product or service sold and/or offered for sale by any
defendant"). Moreover, the request was not limited to documents
in paper form, but was expressly "intended to seek documents and
things as broadly as those words are defined by Fed.R.Civ.P. 34
and applicable case law" (Pl.Mem., Ex. A, at 2).*fn2
Defendant did not object to those document requests (Pl.Mem.,
Ex. B, Response to Document Request). However, notwithstanding
the scope of these requests, plaintiff produced only a single
B. The Court's October 23, 1998 Order.
Understandably skeptical about this minimal production,
plaintiff filed a motion to compel, which was heard by the Court
on October 23, 1998. At that time, counsel for defendants — who
has since been replaced by defendants' current counsel —
represented to the Court that defendants had "complied fully"
with plaintiff's document request (Pl.Mem.Ex. C, 10/23/98 Tr. at
2). Plaintiff indicated that on the morning of October 23, in
addition to the one invoice referenced in the written response to
the document request, defendants had produced "several additional
invoices" (Id. at 3). However, plaintiff continued to express
the concern "that there are additional documents that are out
there that we will not receive unless we push and request them
In response, the Court directed that defendant's primary
custodian of documents, Mr. Heinzel, be made available for a
deposition with regard to documents by no later than October 29,
1998, and that the deposition be conducted at Mr. Heinzel's
expense (Id. at 3-4). In addition, the Court ordered "all
parties to preserve the integrity of all computers that are at
issue here without any spoilation of any information contained
therein" (Id. at 4) (emphasis added). In response to what the
Court plainly perceived as an effort by predecessor defense
counsel to hedge in that broad directive, the Court was explicit
about what its order meant:
[I]f it's "don't push the delete button" or if it's
"don't change the C drive" or "don't pull the plug
at the wrong time" or "don't take a sledge hammer to
it," I don't want it spoiled in any way, okay, so
don't limit it.
(Id. at 5) (emphasis added). Later that same day, plaintiff
served on defendants a request to inspect "any and all computers
used by any of the defendants since November of 1996" (Pl.Mem.Ex.
D). The inspection was arranged to take place at the offices of
plaintiff's lawyers on October 29, 1998, the same date on which
Mr. Heinzel was to appear for deposition as a document custodian.
C. The History of the Packard Bell Computer at Issue.
One of the computers covered by the request for inspection was
a Packard Bell personal computer purchased by Mr. Heinzel in 1994
(Def.Mem.Ex. E, Heinzel Aff. ¶ 2). The computer was serviced
twice in 1995: the first time because it was functioning
improperly, and the second time to add memory and a faster modem
(Id. ¶ 3). There is no evidence that the Packard Bell computer
was serviced again at any time between 1995 and the time it was
brought to the offices of plaintiff's counsel for inspection on
October 29, 1998.
According to Mr. Heinzel, he kept the Packard Bell computer in
a basement office in his home (Pl.Mem.Ex. F, Heinzel Dep. 10).
Mr. Heinzel said that beginning sometime in 1997, the Packard
began to work sporadically, after it was struck by an air
compressor that fell from a shelf and dented the right rear of
the computer. According to Mr. Heinzel, at times thereafter the
Packard Bell computer would get "hung up" at the Windows for Work
Group screen, and he would have to slap it several times or turn
the computer off and restart it in order for the computer to
function (Pl.Mem.Ex. F, Heinzel Aff. ¶¶ 5-6). Mr. Heinzel said
that in addition to being hit by this air compressor in 1997, the
Packard Bell computer — which is a desktop sized personal
computer — had "fallen off my desktop on at least four to five
occasions" prior to October 29, 1998 (Id. ¶ 7). Nonetheless,
Mr. Heinzel continued to use the Packard Bell computer for
business purposes well into October 1998 (Pl.Mem.Ex. G, Heinzel
The Court does not find Mr. Heinzel's testimony about the
alleged damage to Packard Bell computer, and its allegedly
sporadic performance prior to October 29, 1998, to be entirely
credible. Perhaps an air compressor fell on the computer in 1997.
However, the Court finds it implausible that a desktop computer
would simply "fall off" a desk even once — let alone four to five
times — in less than two years. Mr. Heinzel offers no details
that would explain how such a bizarre event could have repeatedly
occurred. Moreover, the Court finds it implausible that Mr.
Heinzel would continue to use the Packard Bell computer for
business records into late 1998, as he admits he did, if the
computer functioned as sporadically as he claims beginning in
1997. Defendants offer no explanation as to why they did not use
one of the other computers to which they had access (Pl.Mem.Ex.
F, Heinzel Dep. 12-13), or did not buy a replacement computer.
D. The Events Between October 23 and October 28, 1998.
Defendants' memorandum and supporting materials shed no light
on what, if anything, defense counsel did to inform the
defendants of the Court's October 23, 1998 Order that they
"preserve the integrity of all computers that are issue
here."*fn3 However, there is no dispute that between the time of
the October 23 Order and the time of production of the computer
for inspection on October 29, Mr. Heinzel used the Packard Bell
computer on several occasions (Pl.Mem.Ex. E-5). A printout from
the directory of the hard drive of the Packard Bell computer
reveals that various files were accessed on October 25 ...