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de España v. American Bureau of Shipping

August 18, 2008

REINO DE ESPAÑA, ON ITS OWN BEHALF, AND AS TRUSTEE, PLAINTIFF,
v.
THE AMERICAN BUREAU OF SHIPPING, INC., DEFENDANT.



The opinion of the court was delivered by: Laura Taylor Swain, United States District Judge

MEMORANDUM OPINION & ORDER

On October 18, 2004, the Court referred this action, which arises out of the sinking of an oil tanker off the coast of Spain, to Magistrate Judge Ronald L. Ellis for general pre-trial supervision. Magistrate Judge Ellis issued: (1) an Opinion and Order on November 2, 2006 ("November 2 Order"), granting the motion of defendants American Bureau of Shipping, ABS Group of Companies, Inc., and ABSG Consulting Inc. (collectively, "Defendants" or "ABS") to compel Plaintiff Reino de España ("Plaintiff" or "Spain") to disclose electronic documents; (2) an Opinion and Order dated January 25, 2007 ("January 25 Order"), denying Spain's motion for reconsideration of the November 2, 2006, Order; and (3) an Opinion and Order dated June 1, 2007 ("June 1 Order"), granting in part Defendants' motion for sanctions.

This Memorandum Opinion and Order addresses Plaintiff's objections, pursuant to Federal Rule of Civil Procedure 72(a), to (1) the November 2 and January 25 Orders insofar as Judge Ellis granted Defendants' motion to compel and permitted an application for sanctions against Plaintiff; and (2) the June 1 Order insofar as Judge Ellis granted sanctions against Plaintiffs in the form of attorneys' fees and costs incurred by Defendants in making their motion to compel discovery. After a thorough review of the Orders, Plaintiff's objections, and Defendants' responses thereto, the Court overrules Plaintiff's objections in their entirety. Judge Ellis' decisions were neither clearly erroneous nor contrary to law.

BACKGROUND*fn1

ABS sought production of Spain's electronic documents beginning with its first discovery request, which was served in January 2004. ABS requested, among other things, non-privileged electronic documents from the nine-day period from November 12 through 20, 2002, during which Spain took control of the Prestige. After Defendants moved to compel production of the electronic material, Judge Ellis afforded the parties an opportunity to present their positions, including full briefing on Defendants' motion to compel, a two-day evidentiary hearing on February 9-10, 2006, as well as the submission of post-hearing briefing on the issues. After considering all of the evidence presented, Judge Ellis found that Spain's "failure to conduct discovery in accordance with the Federal Rules and this Court's rules [was] sanctionable," and determined that Spain's representations that further electronic documents did not exist were unconvincing, in part based on the lack of credibility of one of Spain's witnesses at the February 2006 hearing. (Nov. 2 Order at 7, 12, 14.) Judge Ellis also found that Defendants' request for electronic documents was reasonable and limited, and that Spain had failed to preserve electronic documents, specifically, by failing to place a timely litigation hold on its agencies and ministries.*fn2 The Court granted Defendants' motion with instructions that ABS file a motion "requesting the relief, remedy, or sanction it deems appropriate." (Id. at 14.) In his June 1 Order, Judge Ellis granted sanctions against Spain in the form of attorneys' fees and costs incurred in making Defendants' motion to compel discovery.

DISCUSSION

Standard of Review

If a party timely objects to a magistrate judge's order regarding non-dispositive matters, "[t]he district judge to whom the case is assigned shall consider such objections and shall modify or set aside any portion of the magistrate judge's order found to be clearly erroneous or contrary to law." Fed. R. Civ. P. 72(a); see also 28 U.S.C.A. § 636(b)(1)(A) (West 2005) (the "judge of the court may reconsider any [non-dispositive] pretrial matter . . . where it has been shown that the magistrate judge's order is clearly erroneous or contrary to law"). The magistrate judge's findings may be considered "clearly erroneous" where, "'on the entire evidence,' the [district court] is 'left with the definite and firm conviction that a mistake has been committed.'" Easley v. Cromartie, 532 U.S. 234, 243 (2001) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948)). Since this standard of review is "highly deferential[,] . . . magistrate judges are afforded broad discretion in resolving non-dispositive disputes and reversal is appropriate only if their discretion is abused." Derthick v. Bassett-Walker, Inc., Nos. 90 Civ. 5427(JMC), 90 Civ. 7479(JMC), & 90 Civ. 3845(JMC), 1992 WL 249951, at *8 (S.D.N.Y. Sept. 23, 1992).

Objections to Judge Ellis' November 2 and January 25 Orders Judge Ellis Properly Put Spain on Notice of the Preservation and Spoliation Issues

Spain argues that Judge Ellis "incorrectly found that Spain had been given adequate notice of the Magistrate Judge's intent to hear evidence on the preservation of evidence and spoliation [at the February 9, 2006, hearing on Defendants' motion to compel]." (Pl.'s Objs. Feb. 8, 2007, 9.) Spain's contention that it was denied an opportunity to prepare for and present evidence on the preservation issue is inconsistent with the clear record of this case.

In the November 2 Order, Judge Ellis explained:

Spain moved to limit the scope of the [February 2006] hearing to the technical nature of its email systems and use of email, arguing that issues related to the preservation of destruction of email should not be addressed. The Court directed the parties to be prepared to address all issues surrounding the pending motion. (Nov. 2 Order at 3) (emphasis added); (see also Anduiza Aff., Ex. 16, Feb. 9, 2006, Evid. Hrg. Tr. 42:2-9.) In the January 24 Order, Judge Ellis further noted:

Prior to the hearing, the Court stated that it would not preclude evidence of preservation at the hearing. Indeed both parties were given the opportunity to brief the preservation issue, along with any other issues presented during the evidentiary hearing. Spain presented some arguments on the preservation issues, but those arguments do not support reconsideration of this Court's [November 2] Opinion and Order. (Jan. 24 Order at 4.)

Although Spain claims that it "was denied an adequate opportunity to prepare for and present evidence on the preservation issue" the record demonstrates the contrary. (Pl.'s Objs. Feb. 8, 2007, 10.) Spain has been on notice of Defendants' preservation and spoliation concerns since at least December 2004. (See Anduiza Aff. Ex. 7, Tab R at 3.) Defendants also asserted in their October 2005 motion to compel papers, which were filed more than three months prior to the evidentiary hearing, that Spain's failure to produce electronic discovery might be the result of Spain's failure to preserve evidence. (Chowhan Aff., Feb. 21, 2007, Ex. B at 12 n.3.) Moreover, as to Spain's argument that its witnesses were ill-prepared to testify about preservation issues at the February 2006 evidentiary hearing, the transcript of the February 2006 hearing, as well as Plaintiff's February 8, 2007, papers,*fn3 indicate that Spain was on notice that preservation and spoliation might be inquired into during the hearing.*fn4 Further, Spain's contention that its witnesses were ill-prepared is inconsistent with the affidavits of those same witnesses, which purport to detail a knowledge of preservation and spoliation issues in the context of electronic discovery. In light of Defendants' briefing of its preservation and spoliation concerns months prior to the February 2006 hearing, Judge Ellis' direction that these issues might be addressed at the ...


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