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Tile Unlimited, Inc. v. Blanke Corp.

United States District Court, Seventh Circuit

January 23, 2014

TILE UNLIMITED, INC., individually and as a representative of similarly situated persons, Plaintiff,



After the District Judge referred this case to this court for discovery supervision [dkt 157, 158], defendant Blanke GmbH and Co. KG ("Blanke Germany") moved for a protective order and sanctions. (Blanke Mot.) [Dkt 185.][1] This court granted the motion with respect to the protective order and directed plaintiff Tile Unlimited, Inc. ("Tile") to respond to the sanctions request. (Order, June 5, 2013.) [Dkt 194.] Tile has filed its response (Pl.'s Resp.) [dkt 222], and Blanke Germany has filed a reply (Blanke Reply) [dkt 224]. For the reasons below, the court denies Blanke Germany's motion for sanctions without prejudice to a renewed motion if it later becomes clear that Tile or its counsel is engaging in a pattern of disregarding discovery rules or failing to comply with court orders in this case.


Tile initiated this lawsuit against Virginia Tile, Inc., and Blanke Corp. (an American corporation) as a putative class action, alleging claims arising from the manufacture and sale of tile underlayment. (Not. Removal, Ex. A., Compl.) [Dkt 1.] Tile later amended the complaint to name German corporate defendants, including Blanke Germany, which allegedly manufactures and distributes the underlayment at issue. (Am. Compl. ¶¶ 3-5.) [Dkt 73.] After Blanke Germany moved to dismiss for lack of personal jurisdiction [dkt 117], the District Judge granted Tile's motion for jurisdictional discovery and referred the case to this court for discovery supervision. [Dkt 143, 157, 158.]

Tile then moved to compel the deposition of Blanke Germany's president, Peter Blanke, in Germany using the video-conferencing software Skype. (Pl.'s Suppl. Mot. Compel.) [Dkt 168.] Tile suggested that, if Mr. Blanke did not have the microphone or camera required to use Skype, he could "buy them or go to an Internet cafe." ( Id. at 2.) Alternatively, Tile requested that Mr. Blanke be ordered to come to Chicago to be deposed. ( Id. at 3.)

On April 17, 2013, Tile's motion was denied without prejudice. (Order, Apr. 17, 2013 at 5-7.) [Dkt 174.] The court explained that Tile failed to submit any plan for someone to be present in Germany to administer an oath to Mr. Blanke as required by Fed.R.Civ.P. 28(b). ( Id. at 5-6.) The court also noted that Tile's assertion that "swearing in witnesses is illegal in Germany'" was not supported by any citation to authority. ( Id. at 5 n. 4, quoting Pl.'s Reply Mot. Compel at 3. [Dkt 171].) Further, Tile's counsel failed provide factual material, aside from his own assertions, to support the reliability of Skype as a means of taking deposition testimony, even after the court gave him an opportunity to file a supplement to defend Skype's reliability. (Order, Apr. 17, 2013, at 6-7.) The court also denied Tile's alternative request to take the deposition in Chicago, explaining that Tile had not provided any authority supporting compelling "a German citizen who is president of a German company to travel to Chicago to give testimony in a case in which jurisdiction over the German company has not yet been established." ( Id. at 8.) The court urged the parties to reach an agreement about the means for taking Mr. Blanke's deposition, noting that Blanke Germany remained willing to negotiate the matter. ( Id. )

Notwithstanding that order, on May 7, 2013, three weeks after the court issued its ruling, Tile served Blanke Germany's counsel with a notice of deposition ordering the production of a Blanke Germany representative in Chicago. (Blanke Mot., Ex. 1.) Blanke Germany then filed a motion for a protective order to prevent the Chicago deposition of Mr. Blanke, which it coupled with the present motion for an award of sanctions and expenses. (Blanke Mot. at 4-5.) Blanke Germany asserted that Tile "reject[ed]" the court's April 2013 order by noticing the deposition and that, despite the order, Title had "at no time" sought to "modify its position that the deposition must proceed, either in Chicago or by Skype without a court reporter or translator in Germany with the witness." ( Id. at 5.)

Noting the presumption that a corporation be deposed at its principal place of business, this court granted Blanke Germany's motion because Tile still had not provided authority for the court to order a German corporation to send a corporate representative to Chicago when personal jurisdiction in Illinois is contested. (Order, June 5, 2013, at 5.) [Dkt 194.] The court observed that Tile had been ordered at a hearing on the motion to identify any supporting authority for its position and had cited only one decision addressing deposition in Chicago of a foreign corporation contesting jurisdiction, P.H. Intl. Trad. Co., v. Christia Confezioni S.p.A., No. 04 C 903, 2004 WL 2538299 at *2 (N.D. Ill. Sept. 24, 2004). In that decision, the court "strongly recommend[ed]" that the parties take the deposition of an Italian company's representative by videoconference at plaintiff's expense, but held that the deposition could take place in Chicago if video conferencing was not technologically possible. (Order, June 5, 2013, at 5.) In contrast, in this case, "while Blanke did object to using Skype for a deposition, it is amenable to a deposition by conventional videoconference or telephone conference provided that Tile pays the costs of the video or telephone conference, a court reporter and a translator." ( Id. at 4.) Tile was given time (which was later extended) to respond to Blanke Germany's requests for expenses under Fed.R.Civ.P. 37(a)(5) and for sanctions under 28 U.S.C. § 1927. ( Id. at 5.)[2]

In the meantime, the parties appeared before the District Judge who encouraged them to work out the deposition by agreement. (Hr'g, July 12, 2013, at 10-11.) [Dkt 201.] The parties then returned to this court to work out the details of an agreed deposition by telephone. ( See Pl's Mot. Entry Order [dkt 202]; Order, July 25, 2013 [dkt 209].) The parties completed Mr. Blanke's deposition in August 2013. (Pl.'s Resp. at 7; Blanke Reply at 2 n. 2.) Blanke Germany's request for expenses and sanctions against Tile remains pending before this court.


I. Expenses under Rule 37(a)(5)(a)

When a motion for a protective order is granted, "the court must, after giving an opportunity to be heard, require the party or deponent whose conduct necessitated the motion, the party or attorney advising that conduct, or both to pay the movant's reasonable expenses incurred in making the motion, including attorney's fees." Fed.R.Civ.P. 37(a)(5)(A); see Fed.R.Civ.P. 26(c)(3) (applying Rule 37(a)(5)(A) to protective orders). Expenses will not be awarded, however, if the movant did not first try to resolve the dispute without court action, the opposing party's actions were "substantially justified, " or the award would be unjust. Fed.R.Civ.P. 37(a)(5)(A).

As an initial matter, Tile contests the jurisdiction of the magistrate judge to impose expenses. (Pl.'s Resp. at 6.) As this court recently noted, the Seventh Circuit has not squarely addressed whether a magistrate judge may award expenses under Rule 37(a)(5). Cardenas v. Grozdic, No. 12 C 292, 2013 WL 4080652 at *3 n. 2 (N.D. Ill. Aug. 13, 2013). It is not necessary, however, to reach that point because the court determines that, notwithstanding Tile's inappropriate conduct, expenses should not be granted at this time.

Turning to the merits, Tile argues that sanctions should not be imposed because it had a "good faith basis" to seek to compel Mr. Blanke's deposition, either in Chicago or by Skype. (Pl.'s Resp. at 3.) Tile also suggests that the court wrongly decided that compelling Mr. Blanke's deposition in Chciago would be outside its powers. ( Id. at 3-4.) Tile's argument misconstrues the court's earlier ruling, which recognized that a corporation may be required to be deposed in a place other than its principal place of business if "there are unusual circumstances which justify such an inconvenience to the corporation.'" (Order, June 5, 2013, at 3, quoting Chris-Craft Indus. Prods., Inc. v. Kuraray Co., 184 ...

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