The opinion of the court was delivered by: Honorable Richard J. Arcara United States District Judge
This case involves alleged patent infringement concerning platforms that can be assembled under the deck of a bridge to support laborers working on the bridge's structure. Pretrial proceedings were referred to Magistrate Judge Hugh B. Scott pursuant to 28 U.S.C. § 636(b)(1). The case is presently before me for review of a December 30, 2011 discovery and discovery-sanctions decision by Magistrate Judge Scott that was titled "Report and Recommendation." [Dkt. 178].
For the reasons that follow, the Court finds that Magistrate Judge Scott's December 30, 2011 decision not to impose discovery sanctions, but extending the time for the completion of discovery, was a nondispositive ruling subject to interlocutory review pursuant to a clearly erroneous or contrary to law standard of review. Because that decision is neither clearly erroneous nor contrary to law, it is affirmed.
On August 31, 2011, the defendants, EZ Access, Inc., Anastasios G. Hatsios, Bridgeplatforms, Inc., George Hatsios, and Linda Lee Nolte (collectively, "Bridgeplatforms"), moved before Magistrate Judge Scott for the imposition of discovery sanctions pursuant to Fed.R.Civ.P. 37 against the plaintiffs, Safespan Platform Systems, Inc., Lambros Apostolopoulos, and Paul Kristen, Inc. (collectively, "Safespan"). Defendant Bridgeplatforms sought the sanctions on the ground that plaintiff Safespan failed timely to produce documents that the defendants had requested pursuant to Fed.R.Civ.P. 26 that were relevant to the plaintiffs' alleged lost-profits damages.
Specifically, defendant Bridgeplatforms argued that the plaintiff Safespan's lost-profits document production remained incomplete and that many of the documents that were produced by plaintiffs were produced so late -- just weeks before a Court-ordered discovery cutoff date -- that some amount of the defendants' crucial fact discovery from third-party witnesses was stymied. The defendants asserted that they were required to complete third-party discovery earlier and that there had been no time to use the late-produced documents. To sanction the plaintiffs' late production of documents, the defendants moved for an order precluding the plaintiffs from offering any evidence of lost profits at trial.
Defendant Bridgeplatforms also sought an award of attorneys' fees as an additional sanction for plaintiff Safespan's alleged discovery abuse and, in the alternative, sought an order compelling production of all of the lost-profits documents. The defendants did not seek an extension of the discovery cutoff to have time to take discovery to develop evidence to meet plaintiffs' lost-profits evidence, however.
Plaintiff Safespan's response to defendant Bridgeplatforms' motion to preclude evidence of lost profits and for an attorneys' fees sanction was primarily to complain about the defendants' own abusive conduct of discovery and to argue that the plaintiffs' production of documents was substantially justified by unusual circumstances of this case. The plaintiffs specifically disputed that preclusion of lost-profits evidence was a proportionate sanction for the delay in producing the lost-profits documents and disputed that any sanction at all was appropriate.
On December 30, 2011, Magistrate Judge Scott issued a decision which denied defendant Bridgeplatforms' request to preclude evidence at trial of plaintiff Safespan's lost profits. Magistrate Judge Scott granted the defendants' alternative motion to compel production of the lost-profits documents. The Magistrate Judge also ordered, on his own initiative, the time for completion of discovery extended, thereby giving the defendants additional time for discovery with the lost-profits documents. The Magistrate Judge considered the defendants' requests for an award of attorneys' fees as a sanction, but concluded that the parties should each bear their own attorneys' fees.
The parties disagree on the applicable standard of review of Magistrate Judge Scott's December 30, 2011 decision. A magistrate judge is authorized to "hear and determine" any pretrial matter that is "not dispositive of a claim or defense of a party." Fed.R.Civ.P. 72(a); see 28 U.S.C. § 636(b)(1)(A). "Matters concerning discovery are generally considered 'nondispositive' of the litigation." Thomas E. Hoar v. Sara Lee Corp., 900 F.2d 522, 525 (2d Cir. 1990). An order of a magistrate judge made under the "hear and determine" authority can be modified or set aside by the district judge only if it is "clearly erroneous or contrary to law." Fed.R.Civ.P. 72(a); 28 U.S.C. § 636(b)(1)(A); Thomas E. Hoar v. Sara Lee Corp., 900 F.2d at 525.
When issuing an order as to pretrial matters that disposes of a claim or a defense of a party, a magistrate judge "shall enter into the record a recommendation for disposition of the matter, including proposed findings of fact when appropriate." Fed.R.Civ.P. 72(b); see 28 U.S.C. § 636(b)(1)(B). Such recommendations are subject to de novo review by the presiding district judge. Id.; see Thomas E. Hoar v. Sara Lee Corp., 900 F.2d at 525; see e.g., Zises v. Department of Social Services of Human Resources Admin. of City of New York, 112 F.R.D. 223 (E.D.N.Y. 1986) (Fed.R.Civ.P. 37 sanction of dismissal subject to de novo review).
In this case, defendant Bridgeplatforms argues that Magistrate Judge Scott's December 30, 2011 decision denying their motion for preclusion of evidence is subject to de novo review because plaintiff Safespan's late production of the lost-profits documents kept the defendants from taking steps necessary to meet the plaintiffs' evidence of lost profits. The defendants argue that denying the sanction of preclusion effectively disposed of their factual defense to the plaintiffs' lost-profits theory of damages and, because the decision was in this way actually dispositive of the defense, it should be subject to de novo review.
Plaintiffs Safespan, on the other hand, stated during oral argument that Magistrate Judge Scott's December 30, 2011 decision was properly understood as essentially about calendaring matters. They maintain that the decision was therefore nondispositive and that the Court's review should be by the standard of review ...