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George Widmar v. Sun Chemical Corporation

May 16, 2012


The opinion of the court was delivered by: Hon. Harry D. Leinenweber


Before the Court are Plaintiff's Motions to Compel and Defendants' various Motions for Contempt, Sanctions, Fees, and Costs. As motion practice drags on this case, this Court remains disappointed that counsel on both sides refuse to grant each other basic professional courtesies. Nonetheless, for the reasons contained herein, the Court denies former Defendant Peter Klug's Motion for Fees and Costs, grants in part and denies in part Defendants' Motion for Sanctions, grants in part and denies in part Plaintiff's Motion to Compel, and denies Sun Chemical's Motion for Civil Contempt and Sanctions. Discovery is extended for thirty (30) days from the date that this order is entered.


Former Defendant Peter Klug ("Klug") has filed a Motion for Fees and Costs pursuant to 28 U.S.C. § 1927. That statute makes any attorney or other person admitted to practice "who so multiplies the proceedings in any case unreasonably and vexatiously" potentially liable "to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." In the Seventh Circuit, such sanctions are appropriate if the movant can show subjective or objective bad faith -- that is, actual ill will or conduct that is objectively on par with at least reckless indifference to the law, rules, or facts. Dal Pozzo v. Basic Mach. Co., Inc., 463 F.3d 609, 614 (7th Cir. 2006). Maintaining a claim that is "without a plausible legal or factual basis and lacking in justification" can justify sanctions. Walter v. Fiorenzo, 840 F.2d 427, 433-34 (7th Cir. 1988). Mere negligence will not suffice, but extreme or extraordinary negligence may. Kotsilieris v. Chalmers, 966 F.2d 1181, 1184-85 (7th Cir. 1992).

Essentially, Klug argues that Plaintiff and his counsel knew before the original complaint was filed that Klug had not made the alleged defamatory statements, but merely witnessed them. Klug points out that in his deposition, Plaintiff stated that before the complaint was filed, he learned from Ron Petzel ("Petzel") that Ted Knott ("Knott") had made the alleged statements, and that Klug had merely been present. Accordingly, Klug argues, when Plaintiff's counsel led this Court to believe that they dismissed Klug as soon as they understood his role, they misled the Court. Klug argues that Plaintiff's counsel's behavior was reckless, careless, and unconscionable. (Klug also argues that Plaintiff provided false interrogatory responses regarding the defamatory statements.

However, read as a whole, the interrogatory responses clearly set out Plaintiff's understanding that Knott made the alleged statements in Klug's presence.) Klug claims to have been harmed by the stress of the suit, having to retain and meet with counsel, having a tarnished reputation, and by having to disclose henceforth that he has been sued.

Plaintiff, through counsel and his own affidavit, explains that he told his counsel the information he first learned -- that Klug and Knott had both made defamatory statements. When he learned otherwise shortly thereafter, he failed to convey that information to his attorneys because he misunderstood the law of defamation - he believed that Klug would still be liable, for being indirectly responsible for the false information. Plaintiff and his counsel argue that when the misunderstanding became apparent during discovery, they promptly endeavored to dismiss Klug from the suit. Such a miscommunication should not be sanctionable, Plaintiff argues, noting that defense counsel evidently failed to inform Klug for several months that Plaintiff was trying to drop him from the suit.

The Court agrees that to the extent that the Motion is directed at Plaintiff himself, it is improper. The statute clearly directs itself toward attorneys, not clients. Further, the Court concludes that Klug has done nothing to demonstrate that this was anything more than an inadvertent failure of communication between Plaintiff and his counsel, which was promptly remedied when counsel became aware of it. The Court sees no "extreme negligence" on the facts here.

Accordingly, the Court declines to impose fees and costs on Plaintiff's counsel under § 1927.


Defendants ask the Court, pursuant to its inherent powers and FED. R. CIV. P. 37 to "dismiss Plaintiff's claims with prejudice as a sanction for his numerous and repeated discovery violations and perjurious statements, and order Plaintiff to pay Defendants all fees and costs incurred as a result of Plaintiff's misconduct." Defendants primarily object that Plaintiff: (a) destroyed evidence by deleting the personal e-mail account he had used during his employment and destroying documents showing his post-termination income; (b) stole confidential and/or proprietary documents from Sun Chemical; and (c) perjured himself in his sworn answers to interrogatories.

If a party fails to follow discovery rules or a court order, they become subject to a variety of possible sanctions, ranging from being unable to use non-disclosed evidence up to dismissal of the case. FED. R. CIV. P. 37(b, c). However, the Seventh Circuit calls dismissal an "extreme" sanction "that should be used only as a last resort in situations where the non-complying party displayed willfulness, bad faith, or fault." Robinson v. Champaign Unit 4 School Dist., 412 Fed.Appx. 873, 877 (7th Cir. 2011). Before dismissing a case for discovery violations, courts should assess whether lesser discovery sanctions would suffice to cure any prejudice. Id. Even with potential perjury, the punishment should be proportional to the offense and harm done, and dismissal can be excessive. Allen v. Chicago Transit Auth., 317 F.3d 696, 702-703 (7th Cir. 2003).

Willfulness is a question of fact. Maynard v. Nygren, 372 F.3d 890, 892 (7th Cir. 2004). The Seventh Circuit has not definitively resolved, however, whether willfulness must be found by a preponderance of the evidence, or by clear and convincing evidence. Watkins v. Nielsen, 405 Fed.Appx. 42, 44-45 (7th Cir. 2010).

A. Destruction of Evidence

Regarding the alleged destruction of evidence, Defendants object that Plaintiff deleted his old e-mail address, and cannot produce certain income records from after his termination. Although this case was not commenced until 2011, Defendants point out that Plaintiff was copied on litigation hold letters sent to Sun Chemical in January 2010, placing him on notice of his obligation to retain documents. Nonetheless, he deleted his old e-mail address two months later, and lost certain pay stubs.

Plaintiff argues that he changed his e-mail address for innocent reasons relating to his job search, and did not understand that the records would be destroyed until he subsequently tried to obtain them from Yahoo. He points out that, at deposition, Defendants only brought this up in the context of his alleged failure to mitigate his unemployment, and identify no other specific prejudice they have suffered from the loss. As to the lost income documents, he calls the loss merely accidental, in that they were misplaced somewhere in his home. However, he argues that Defendants suffer no prejudice, because he has produced his tax returns for the years in question along with all relevant records that he could find.

A sanction of dismissal is disproportionate to these discovery failures. Defendants have not demonstrated, even by a preponderance of evidence, that there was anything approaching intentional, bad faith destruction of evidence. Where a party breaches a duty to preserve documents, courts should consider whether the other party is prejudiced, and whether the breach was willful or the result of bad faith or fault. See Bryden v. Boys and Girls Club of Rockford, No. 09 C 50290, 2011 WL 843907, at *2 (N.D. Ill. Mar. 8, 2011) citing Faas v. Sears, Roebuck, & Co., 532 F.3d 633, 644 (7th Cir. 2008). Fault is a function of the reasonableness of the challenged conduct, and may be attributed for gross negligence, but not mere mistake or ordinary negligence. Id.

The Court finds nothing above ordinary negligence here. Cf. Rhodes v. LaSalle Bank, No. 02 C 2059, 2005 WL 281221, at *3-4 (sanctioning Plaintiff who destroyed relevant, discoverable notes during discovery). That being said, however, Defendants will be prejudiced at least in their ability to present evidence of mitigation and to refute Plaintiff's damages evidence. Accordingly, Plaintiff will not be allowed to testify or present evidence of any job applications or related activity before March 2010, unless he has produced evidence of a specific job application to the Defendants.

B. Stolen Documents

Defendants argue that between the summer of 2009 and his firing, Plaintiff took home stolen documents in order to prove that the product problems at Sun Chemical were not his fault. Defendants object that these documents were not timely turned over in response to discovery, and that even when they were, Plaintiff refused to mark them as confidential.

Plaintiff claims that he stole nothing, but instead brought some documents home as part of his job over the years, and was never asked to return or destroy them. Plaintiff argues that the rolling production is a function of counsel's growing understanding of the chemical processes at issue -- the more counsel understands, more documents are deemed relevant and turned over. Finally, Plaintiff notes that copies of the documents have always been within Defendants' control, and adds that it is a good thing that Plaintiff kept them, because Defendants have failed to disclose those documents, even when they are relevant to Plaintiff's discovery requests. Plaintiff seeks fees and costs for having to respond to this motion.

Defendants have not presented evidence that Plaintiff retains documents he should not have had access to, nor have they alleged that Plaintiff was ever told to return any documents. Cf. Rhodes, 2005 WL 281221, at *4-5 (Plaintiff stole confidential documents from her supervisor's desk). Dismissal is not justified here. Nonetheless, Plaintiff has not addressed the failure to mark documents as confidential and has taken a leisurely pace in turning over the documents he possesses. Accordingly, Plaintiff is ordered to mark all requested documents confidential, and to provide Defendants with a list of all documents in his possession relating to Sun Chemical (other than those turned over by Defendants in this matter). The ...

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