The opinion of the court was delivered by: Pitman, United States Magistrate Judge
Defendants move to recover sanctions in the amount of $8,387.00 against plaintiff's counsel, Bruce Levinson, Esq. or against plaintiff, pursuant to 28 U.S.C. § 1927 and the inherent powers of the court. Plaintiff cross-moves for an award of sanctions in an unspecified total amount against defendants and their counsel, David J. Hoffman, Esq. pursuant to Federal Rules of Civil Procedure Rules 11 and 30, 28 U.S.C. § 1927 and the inherent powers of the court.
For the reasons set forth below, defendants' motion is denied in all respects, and plaintiff's motion is granted in part and denied in part.
Defendants' motion arises from the dismissal of plain-tiff's complaint for lack of subject matter jurisdiction under the Perishable Agricultural Commodities Act, 7 U.S.C. §§ 499a-499t, ("PACA").
In brief, plaintiff alleged that on August 6, 2003 defendants entered into a contract to purchase from plaintiff wholesale amounts of cabbage. Pursuant to that contract, plaintiff, between December 3, 2004 and June 19, 2005, delivered to defendants approximately one million pounds of unprocessed cabbage. Plaintiff alleged that despite repeated demands, defendants failed to pay the purchase price of the cabbage, namely $76,126.13 (Amended Compl. at ¶¶ 6, 7).
Plaintiff's initial complaint, filed December 30, 2005, and amended complaint, filed March 31, 2006, alleged federal jurisdiction based on PACA § 5(c)(5), 7 U.S.C. § 499e(c)(5); 28 U.S.C. § 1331 and 28 U.S.C. § 1332 (Compl. at ¶ 1 and Amended Compl. at ¶ 1). Plaintiff's complaint and amended complaint alleged that plaintiff and defendant corporations, at the time of the transactions at issue, were licensed dealers under PACA and engaged in sales of wholesale produce in interstate commerce (Compl. at ¶¶ 3, 4, Amended Compl. at ¶¶ 3, 4). The complaints further alleged the sale and non-payment described above. The complaints then went on to claim that "at the time of receipt of the produce, plaintiff became a beneficiary in a statutory trust designed to assure payment to produce suppliers. . . . Plaintiff preserved its interest in the PACA trust in the amount of $76,126.13 and remains a beneficiary until full payment is made for the produce" (Compl. at ¶¶ 8, 9 and Amended Compl. at ¶¶ 10, 11).*fn1 After Root Brothers filed its first complaint, there were unsuccessful attempts to settle the matter; when those efforts failed defendants retained a new attorney, David Hoffman, Esq. on February 13, 2006 (Affidavit of Bruce Levinson, Esq., in Support of Plaintiff's Cross-Motion for Sanctions, sworn to October 16, 2006 ("Levinson Aff.") at ¶¶ 6, 7). Mr. Hoffman promptly requested a two-week extension of time to respond to the complaint from plaintiff's counsel (Defendants' Memorandum of Law in Support of the Imposition of Sanctions ("Defendants' Sanctions Memo.") at 6 and Levinson Aff. at ¶ 7). Plaintiff's attorney, Bruce Levinson, Esq., agreed to grant the extension on the condition that defendants waive their jurisdictional defenses (Levinson Aff. at ¶ 7). Mr. Hoffman refused to agree to this condition (Levinson Aff. at ¶ 7), and defendants then successfully sought an extension of time from the Court (February 13, 2006 Order, Docket Item 10). Defendants subsequently moved to dismiss the complaint for lack of subject matter jurisdiction and failure to state a claim upon which relief could be granted (Notice of Motion, Docket Item 11).
On March 23, 2006 counsel appeared for oral argument before the Honorable Leonard B. Sand, United States District Judge. Among other things, defendants argued that the court lacked subject matter jurisdiction because plaintiff's invoices lacked the notice required for federal jurisdiction under PACA (March 23, 2006 Hearing Transcript at 4-5). Plaintiff did not respond to defendants' argument concerning the lack of notice but nevertheless maintained that its claim was appropriately brought in federal court (March 23, 2006 Hearing Transcript at 5-6). At the conclusion of the argument, Judge Sand denied defendants' motion on the condition that plaintiff file an amended complaint within ten days that "set[s] forth the matters that you have set forth in your memorandum of law as to the identity of the plaintiff and the other matters" (March 23, 2006 Hearing Transcript at 6). Judge Sand also permitted discovery to proceed and directed that it be completed within 45 days of defendants' answer to the amended complaint (March 23 Hearing Transcript at 7).
On March 31, 2006 Root Brothers filed its amended complaint which again alleged federal court jurisdiction under PACA, and that "Under the terms of the contract entered into by the parties, payment was due ten days from the date of each invoice. Plaintiff preserved its interest in the PACA trust in the amount of $76,126.13 . . ." (Amended Compl. at ¶ 11). Defendants filed their answer on April 8, and on April 10 served plaintiff with several discovery requests, including a notice to take the deposition of one of plaintiff's principals, Robin Root, on Monday May 15, 2006 at 9:30 a.m. (Notice of Deposition signed by David Hoffman on April 10, 2006, annexed as Exhibit D to Plaintiff's Cross-Motion for Sanctions ("Plaintiff's Cross-Motion")). During the week preceding May 15, 2006, plaintiff's counsel "reached out to defendants' counsel by telephone, facsimile and written letter [sic] to confirm defendants' desire to proceed with the deposition" (Levinson Aff. at ¶ 11). Defendants' counsel did not respond to these inquiries, and on Friday May 12 --- the last business day before the date scheduled for the deposition --- plaintiff's counsel faxed to defendants' counsel a letter confirming the scheduled deposition and informing him that Mr. Root would arrive at his office at 9:30 Monday morning as requested in defendants' notice (Letter to David J. Hoffman, Esq. from Gregory Brown, dated May 12, 2006, annexed as Exhibit F to Plaintiff's Cross-Motion). The confirmation letter also informed defendants' counsel that Mr. Root had purchased a plane ticket to travel to the deposition.
On Saturday May 13, defendants' counsel left plain-tiff's counsel a voicemail message at counsel's office canceling the deposition (Letter to Judge Sand from Bruce Levinson, Esq., dated May 15, 2006, annexed as Exhibit G to Plaintiff's Cross-Motion ("Levinson May 15 Letter"); Letter to Judge Sand from David J. Hoffman, Esq., dated May 27, 2006, annexed as Exhibit G to Declaration of David J. Hoffman, Esq., in Support of Defendants' Motion for Sanctions ("Hoffman May 27 Letter") ("Hoffman Decl.")). Plaintiff's counsel did not receive this message over the weekend, and Mr. Root, who resides in Albion, flew to New York City early Monday morning, arriving at the office of defendants' counsel at approximately 9:30 a.m., as requested in defendants' notice of deposition (Levinson May 15 Letter). Mr. Root, his attorney, and his attorney's associate, Gregory Brown, waited for defense counsel at his office, unaware that defense counsel had intended to cancel or postpone the deposition. After plaintiff's attorney sent his client back to the airport and returned to his office, he discovered the voicemail message that his adversary had left over the weekend (Levinson May 15 Letter). According to Mr. Levinson's affidavit, Mr. Levinson, his associate and Mr. Root "waited close to three hours at Mr. Hoffman's office" (Levinson Aff. at ¶ 12). In Mr. Levinson's May 15 letter to Judge Sand, he reported "We waited an hour and fifteen minutes before giving up and sending our client back to the airport" (Levinson May 15 Letter). Plaintiff has not explained this discrepancy in the claimed waiting times.
In his letter to Judge Sand attempting to justify his non-appearance on May 15, defendants' counsel stated that he canceled the deposition because "Mr. Levinson served his responses to Defendant's discovery requests on the eve of his client's scheduled deposition. Therefore, I did not received [sic] his documents in time for a meaningful review" (Hoffman May 27 Letter at 1). In the same letter, defendants waived the deposition of Mr. Root, explaining that their review of the documentary evidence confirmed that the transaction was not subject to PACA. (Hoffman May 27 Letter at 1).
On May 12, 2006 plaintiff served its first Request for Admissions. Defendants' served their initial responses on June 13, 2006, accompanied by a letter from their attorney stating "Enclosed please find defendants' responses to the requests for admissions and interrogatories. Some answers are incomplete and I expect to supplement these answers" (August 8, 2006 Transcript at 7). Approximately one month later, on July 7, 2006, plain-tiff's counsel wrote to the court and requested an informal conference to address defendants' responses to the requests for admissions. Plaintiff accused defendants of "stonewalling" and bad faith for providing "evasive" and "woefully incomplete" responses (Letter to Judge Sand from Gregory Brown, dated July 7, 2006, annexed as Exhibit J to Hoffman Decl.). Judge Sand referred the matter to me, and on August 8, 2006 I met with both parties' counsel to discuss the matter.
Immediately before the August 8 conference, defendants' counsel provided the plaintiff with supplemental responses to the May 12 requests to admit. Counsel for plaintiff conceded at the conference that the supplemental answers appeared sufficient (August 8, 2006 Hearing Transcript at 4). During the conference, defendants' counsel explained that the delay in supplementing the responses was due to the fact that Mr. Mak, the sole principal of the corporate defendants, had been either out of the country or out of the state, and Mr. Hoffman was not able to confer with him until the day before the conference (August 8, 2006 Hearing Transcript at 8-9). Defendants' counsel also asserted that there had been no informal attempts by plaintiff's counsel to resolve the dispute before plaintiff sought the court's intervention (August 8 Hearing Transcript at 8-10).
I reviewed defendants' initial responses to the May 12 requests to admit during the August 8 conference, and I concluded that the requests appeared to have been given individualized attention. I also found that the responses appeared to conform to the Federal Rules for Civil Procedure and that the initial responses did not suggest bad faith, despite their repetitiveness (August 8, 2006 Hearing Transcript at 12-14).
On June 14, 2006, defendants moved for summary judgment and dismissal for lack of subject matter jurisdiction pursuant to Fed. R. Civ. Proc. 56 and 12(b)(1) respectively. Defendants argued again that the court lacked subject matter jurisdiction over plaintiff's claim because: (1) plaintiff could not show that it had provided defendants with the written notice required for jurisdiction under PACA; (2) defendants were not "dealers" subject to PACA; and (3) defendants fell within a statutory exception to PACA liability because they processed all produce "within the State where grown" and did not freeze or package the products on ice (Defendants' Memorandum of Law in Support of Motion for Summary Judgment and Dismissal at 1-3, annexed as ...