The opinion of the court was delivered by: MORTON DENLOW, Magistrate Judge
MEMORANDUM OPINION AND ORDER
This case comes before this Court on referral from Judge Bucklo for
resolution of three related motions: (1) a motion for rule to show cause
filed by Plaintiff V.I.M. Recyclers, L.P. ("Plaintiff"); (2) Plaintiff's
motion to enforce an August 22, 2003 order for sanctions; and (3) a
motion to vacate sanctions filed by Defendants Luke Magner and
Industrecycle, L.L.C. (collectively "Defendants") The parties have
consented to this Court's jurisdiction to decide these matters on the
basis of a limited consent pursuant to 28 U.S.C. § 636(c)(1). For the
following reasons, the motion for rule to show cause and the motion to
enforce order are granted and the motion to vacate sanctions is denied.
On June 6, 2003, Judge Bucklo granted Plaintiff's motion to compel Luke
Magner's answers to request for production and interrogatories, ordering
compliance "with respect to production of documents as discussed in
court." Def. Memo. Ex. 3. Likewise, on July 14, 2003, Judge Bucklo granted Plaintiff's motion to compel discovery
relating to post-termination transactions with actual or potential
customers of Plaintiff during the relevant tune frame. Docket #30.
Although no specific compliance date was set for either order, the
parties agreed to a thirty-day deadline from July 14, 2003.
By August 22, 2003, the documents had not been produced. On that date,
the parties appeared before Judge Bucklo on Plaintiff's motion for rule
to show cause and for sanctions. At the hearing, Defendants' counsel
stated that Luke Magner was in the process of filing for bankruptcy and
that counsel had no authority to turn over any documents. Tr. at 3. Judge
Bucklo found Defendants willfully disobeyed her order and granted
Plaintiff's motions. Tr. at 3-4. She imposed sanctions against
Defendants, ordering them to pay Rule 37 costs in the amount of $1000 and
an additional $100 per day until Defendants complied with the order. Tr.
at 4, Dkt. #36. On September 24, 2003, Judge Bucklo denied Defendant's
motion for an order specifying further amount of fees because in her
order of August 22 she had "awarded costs in the amount of $100 per day,
to be paid to plaintiff from that day forward until defendant complies
with the Court's prior orders." Dkt. #39.
On September 9, 2003, Defendants' counsel sent a letter to Plaintiff's
counsel, attaching responses to document requests, interrogatories, and
requests to admit. Def. Memo. Ex. 4. The letter also indicates that other
responsive documents exist, but Defendants refused to produce those
documents unless the parties entered into a protective order. Dkt. 50. On
October 10, 2003, Defendants filed a motion for a protective order with
Judge Bucklo, who referred the case to this Court. Subsequently, Defendants revised their
motion to comport with this Court's requirements and filed that revised
motion on October 24, 2003. On October 29, 2003, this Court granted
Defendants' October 24 motion for a protective order. Dkt. 50. On
November 5, 2003, Defendants produced all responsive documents. On
January 7, 2004, Defendants produced "full and complete" financial
statements for both Industrecycle and Luke Magner. Def. Memo. Ex. 2.
Although Defendants produced documents, they failed to pay the imposed
sanctions. Plaintiff's counsel requested the payments via letters dated
September 29, 2003, October 3, 2003, and December 4, 2003. On February
18, 2004, Defendants filed this motion to vacate sanctions in response to
Plaintiff's motion to enforce the August 22, 2003 order for sanctions.
Plaintiff now seeks a rule to show cause why Defendants should not be
held in contempt for failing to comply with the August 22, 2003
sanctions, seeks to enforce mat order, and requests reimbursement for the
expenses resulting from this motion.
A court has broad discretion to impose sanctions against a party for
abuse of discovery orders. Fed.R.Civ.P. 37. Consequently, a court may
impose sanctions for civil contempt "to coerce obedience to a court order
or to compensate the complainant for losses sustained as a result of the
contumacy." United States v. Berg, 20 F.3d 304, 311 (7th Cir. 1994).
However, before a court can enter a finding of contempt for failure to
follow a court order, the complaining party must prove, by clear and
convincing evidence, that the contemptor has not been "reasonably diligent and energetic in attempting to accomplish
what was ordered." Id. If contempt is found, relief may include an award
of attorney's fees and costs for preparing and prosecuting a contempt
petition. Oxford Capital III., L.L. C. v. Sterling Payroll Fin., L.L.C.,
No. 01 C 1173, 2001 WL 1491521, at *3 (N.D. Ill. Nov. 26, 2001). Where
the court seeks to remedy ongoing disobedience with an order, a civil
fine may be imposed as a coercive sanction against the contemptor that
can be purged through full, timely compliance with the order. Id.
In order to support a finding of civil contempt, "the district court
must be able to point to a decree from the court which set[s] forth in
specific detail an unequivocal command which the party in contempt
violated." Id. A court is authorized to impose civil contempt sanctions
upon the court's own finding that a party has violated the court's
unequivocal command by clear and convincing evidence. Id.
Defendants posit two reasons for their failure to pay Plaintiff any
amount as sanctions. First, sanctions would not be consistent with the
interests of justice, given the proceedings in this case since August 22,
2003. Second, a bona fide dispute exists between Defendants and Plaintiff
as to the amount of the sanctions Defendants are obligated to pay. The
Court will now turn to Defendants' first argument. A. THE INTERESTS OF JUSTICE
Defendants argue that sanctions would not serve the interests of
justice because they were not in violation of a previous court order.
They point to the fact that the June 6 and July 14, 2003 Orders (the
"Orders") compelling them to produce certain documents gave them no
precise deadline by which to produce those documents. Defendants' delay
allegedly was perpetuated by the fact that Magner operates Industrecycle
by himself, without any other employees, and because Magner was
contemplating bankruptcy. Magner did not perceive his delay in compliance
to be violative of the Orders. Thus, Defendants conclude, these
circumstances did not warrant sanctions.
The Court finds this argument disingenuous. The transcripts of the
August 22, 2003 proceedings show that Defendants did not intend to
produce any documents. Defendants did not claim hardship due to a lack of
manpower, nor did they make the argument at that time that there were no
deadlines. Instead, Defendants' sole reason was that Defendant Magner was
contemplating filing bankruptcy. Judge Bucklo found this reason to be
inadequate and the refusal to be willful disobedience. ...