The opinion of the court was delivered by: Judge Joan B. Gottschall
MEMORANDUM OPINION & ORDER
Before the court are MacNeil Automotive Products, Limited's ("MacNeil's") and Cannon Automotive Limited's ("Cannon's") objections to Magistrate Judge Arlander Keys' November 2, 2010 Report and Recommendation on MacNeil's motion for entry of default judgment due to spoliation of evidence. For the reasons set forth below, Cannon's objections are overruled, some of MacNeil's objections are overruled, while some are sustained, and Judge Keys' Report and Recommendation is adopted in part.
MacNeil brought this breach of contract action against Cannon alleging that Cannon supplied it with defective floor mats. For a more complete recitation of the underlying facts and history of the case, see the court's prior opinions. See, e.g., MacNeil Auto. Products Ltd. v. Cannon Auto. Ltd., No. 08 C 139, 2010 U.S. Dist. LEXIS 61001, at *1-6 (N.D. Ill. Apr. 15, 2010).
On April 6, 2010, MacNeil filed a motion for sanctions against Cannon, [(Doc. 129),] alleging that Cannon had violated [his] order dated March 10, 2010[, (Doc. 125)]. Pursuant to that order, [Cannon] was to provide, by April 5, 2010, the remainder of documents responsive to [MacNeil's] Second Set of Document Requests. [(Doc. 125.)] When the deadline arrived, however, MacNeil was not provided any documents. Instead, Cannon indicated on that date that it 'agree[d] to make its facilities and any documents and information therein available for inspection, review and copying by MacNeil.' (MacNeil's Mot. for Sanctions against Cannon Ex. 1, ECF No. 129-2.) The inspection was to take place at Cannon's facility located in London, England.
Cannon's disregard of the order caused [Judge Keys] to grant [MacNeil's] motion and allow [MacNeil's] counsel to travel to England, at Cannon's expense, to inspect the relevant facilities, equipment, and all responsive documents by June 1, 2010. [(Docs. 137-38.)] In early May, [MacNeil's] attorneys made the journey and what they saw . . . or, rather, did not see, forms the basis of [MacNeil's motion for default judgment]. To be sure, [MacNeil's] counsel discovered upon arrival that 'Cannon's facility is entirely gutted, with nothing but yellow tape around empty buildings. Cannon's entire manufacturing lines, processes and all of its manufacturing equipment ha[s] been 'sold or moth-balled." (Pl.'s Mot. for [Default Judgment at 1.]) This process, [MacNeil's] attorneys were told, took place in 'mid-2008' -- shortly after the commencement of the instant litigation and almost two full years before Cannon notified MacNeil and the [c]court that it would make its facilities available for inspection. (Id.)
After discovering that the manufacturing operation was nothing more than a 'ghost-town,' [MacNeil's] counsel went to a designated 'conference room where stacks of paper were present on a circular table.' (Id. at 2, 14.) Though they were initially encouraged by the 'fairly sizeable collection of documents.' They soon realized, to their dismay, that '99.9% of the documents on the table were nothing more than orders and invoices' -- records that MacNeil contends are 'essentially worthless and mean nothing to the case.' (Id. at 14.) But having been 'jammed together on a plane for more than ten hours,' (Mot. for Enforcement of This Ct.'s Apr. 12, 2010 Order 2, ECF No. 153,) [MacNeil's] counsel were determined to obtain the documents that they began the journey in search of. (Pl.'s Mot. for [default judgment at 14.]) Consequently, 'MacNeil's counsel began looking around the conference room and saw that there were stacks of documents that were thrown in the corner and buried underneath a bunch of junk.' (Id. at 14-15.) When they began to review the records, Cannon's attorney informed them that the documents were 'not meant/designated for review.' (Id. at 15.) When he failed to object, however, they continued and discovered that the documents were precisely those that they sought. (Id.)
Mag. J. Keys' Report and Recommendation at 2-4 (footnote omitted.)
On June 25, 2010, MacNeil moved for default judgment against Cannon because of alleged spoliation of evidence and discovery violations. (See Doc. 156.) MacNeil also sought its attorney's fees and costs for all discovery matters since the date of the alleged spoliation (See Mot. for Default Judgment at 17.) On November 2, 2010, Judge Keys entered a Report and Recommendation recommending that this court deny MacNeil's motion and sanction Cannon for spoliation of evidence. (Doc. 219.) Specifically, Judge Keys recommended: (1) "that Cannon be prohibited from introducing any evidence regarding the proper functioning of the equipment [used to manufacture the floor mats] and that it be precluded from arguing that MacNeil or a third party caused the defects," and (2) that MacNeil be awarded its "attorney's fees and costs for all discovery matters related to the manufacturing equipment . . . from the date of spoliation." Mag. J. Keys' Report and Recommendation at 19.
Both Cannon and MacNeil have objected. (See Docs. 225-26.) MacNeil objects to Judge Keys' Report and Recommendation to the extent that he found that default judgment was not warranted, denied MacNeil's requested sanctions, and did not consider MacNeil's argument that Cannon's counterclaim should be dismissed. (See MacNeil's objection at 1.) Cannon argues that Judge Keys' Report and Recommendation is clearly erroneous because it fails to consider all relevant facts or actually find that Cannon's spoliation of evidence prejudiced MacNeil. (See Cannon's objection at 1, 10.)
Federal Rule of Civil Procedure 72 allows parties to file objections to a magistrate judge's order or report and recommendation within 14 days after being served with a copy. Fed. R. Civ. P. 72. "Upon objection, the district judge must review the relevant part of the magistrate judge's decision." Schur v. L.A. Weight Loss Centers, Inc., 577 F.3d 752, 760 (7th Cir. 2009). For dispositive matters, the district court must "determine de novo any part of the magistrate judge's disposition that has been properly objected to," Fed. R. Civ. P. 72(b), while for nondispositive matters, the district judge must "modify or set aside any part of the order that is clearly erroneous or is contrary to law," Fed. R. Civ. P. 72(a).
The parties dispute whether the court should treat this as a dispositive or a nondispositive matter. Whether the district judge treats a matter as dispositive or non-dispositive depends not on the relief sought, but on the relief entered. Gomez v. Martin Marietta Corp., 50 F.3d 1511, 1519-20 (10th Cir. 1995) ("Even though a movant requests a sanction that would be dispositive, if the magistrate judge does not impose a dispositive sanction the order falls under Rule 72(a) rather than Rule 72(b)." (citing 7 James W. Moore et al., Moore's Federal Practice, P 72.04[2.-4], at 72-66 (2d ed. 1994), and Ocelot Oil Corp. v. Sparrow Indus., 847 F.2d 1458, 1462 (10th Cir. 1988)); 12 Charles Alan Wright & Arthur R. Miller, Federal ...