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First Financial Bank, N.A. v. Bauknecht

United States District Court, C.D. Illinois, Peoria Division

April 4, 2014

FIRST FINANCIAL BANK, N.A., Plaintiff,
v.
SCOTT BAUKNECHT and STATE BANK OF GRAYMONT, Defendants.

ORDER & OPINION

JOE B. McDADE, Senior District Judge.

This matter is before the Court to resolve the outstanding issue of whether to award costs to Plaintiff for having respond to Defendants' discovery-related motions (Docs. 71, 72). The Court, in the Order denying these motions, preliminarily determined that Defendants' positions were not substantially justified, but invited Defendants to file briefs stating any grounds for why they should not be ordered to pay costs for opposing their motions. (Doc. 90 at 5). Defendants have both filed briefs on the issue (Docs. 92, 94), and the matter is ready for resolution. For the reasons stated below, costs are awarded to Plaintiff for opposing Defendant Bauknecht's Motion (Doc. 71), but not for opposing Defendant Graymont's Motion (Doc. 72).

BACKGROUND

Defendants each filed a motion arguing that Plaintiff improperly failed to produce certain documents obtained from an iPad that was originally in Defendant Bauknecht's possession. Bauknecht received the iPad from Freestar Bank, a company that eventually merged into Plaintiff, and retained this iPad after his employment with Plaintiff ended. In his initial disclosures, Bauknecht disclosed that he had possession of the iPad, and produced an index of its contents. Plaintiff, wanting to obtain documents from the iPad, made arrangements to have an image taken of all files on the device at its own expense. Defendants were aware of these arrangements. After the image was created, the iPad was returned to and remains in Bauknecht's possession. In the motions in question, Defendants each argued Plaintiff should have produced two documents that it obtained from the iPad because they were responsive to discovery requests. These motions were denied because Plaintiff had no obligation to produce documents that it only obtained through its own discovery requests from Bauknecht. (Doc. 90 at 2-5). Bauknecht made an additional argument in his Motion, related to a different exhibit (Doc. 71 at 3-4). This argument was rejected as incoherent, as it did not state any basis for relief; even if there was any meritorious ground in the request, it was not adequately presented to the Court. (Doc. 90 at 4-5). Only the issue of a potential award of costs remains.

LEGAL STANDARDS

Federal Rule of Civil Procedure 37(a)(5)(B) provides that if a motion to compel discovery is denied, the court "must, after giving an opportunity to be heard, require the movant, the attorney filing the motion, or both to pay the party or deponent who opposed the motion its reasonable expenses incurred in opposing the motion, including attorney's fees." Fed.R.Civ.P. 37(a)(5)(B). However, expenses are not to be awarded if the motion was "substantially justified or other circumstances make an award of expenses unjust." This provision applies to motions for protective orders pursuant to Rule 26(c)(3).

"The great operative principle of Rule 37(a)(5) is that the loser pays." 8B Charles Alan Wright et al., Federal Practice and Procedure ยง 2288 (3d ed. 2013). The purpose of this provision is to discourage unjustified motions and encourage the informal resolution of most discovery matters without court intervention. See id.; Rickels v. City of South Bend, Ind., 33 F.3d 785, 786-87 (7th Cir. 1994). Rule 37(a)(5) "presumptively requires every loser to make good the victor's costs." Rickels, 33 F.3d at 786.

DISCUSSION

Defendants have now been heard, and the Court concludes that Defendant Bauknecht and his attorney must pay Plaintiff's costs for opposing their Motion (Doc. 71), but it would be unjust to require Defendant Graymont to pay costs for opposing its Motion (Doc. 72).

Defendant Bauknecht

Defendant Bauknecht's primary argument for why his position that documents retrieved from his iPad should have been produced to him by Plaintiff was justified is that he and his counsel had decided not to view or download any documents from the iPad "for fear of being accused of tampering with evidence." (Doc. 92 at 2). This argument is baseless. There is no conceivable reason a party would accuse another party of tampering with evidence simply because they also viewed documents on an electronic device that are relevant to the case. If a party viewed or downloaded documents and there was, in fact, no tampering, such an accusation would be as frivolous and unjustified as Bauknecht's discovery motion, and would also likely result in an award of costs for having to defend against it. Whatever their reasons, Bauknecht and his counsel made the decision not to review or print documents they surely knew could be relevant to the litigation from a device in their possession. This choice and the subsequent meritless motion for discovery relief are not justified by a desire to avoid a frivolous accusation of tampering with evidence.

Further, Bauknecht cites a rule of professional conduct that discusses discovery, including prohibitions against destruction or concealment of evidence or obstructive tactics during discovery, and argues that because of this legal backdrop, counsel "had every right and expectation that Plaintiff's counsel would produce and advise Defendant's counsel in advance of the deposition of any exhibits taken from the Ipad [sic] that Plaintiff's counsel intended to use." (Doc. 92 at 3). However, Bauknecht still points to no rule that justifies that expectation; the ethics provision cited does not address this situation, and the cases he cites are also inapplicable. If Bauknecht wanted to know what Plaintiff might have obtained from his iPad, he should have looked at the documents on it.[1]

Bauknecht also now describes his second argument, relating to a confidential settlement agreement marked as Exhibit 26, with slightly more detail than in his initial motion. In the initial motion, Bauknecht listed some facts about this document without any background information, and the only legal support cited for his request was the policy of a "broad scope of discovery" from Rule 26, even though it appeared the problem with Exhibit 26 was not even a matter of failure to disclose but rather that the exhibit should not be used because of its content. (Doc. 71 at 2-3). Bauknecht now sets forth an argument that is at least coherent, but this does not detract from the fact that his initial request ...


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