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Sentry v. Brand Management Inc.

December 19, 2012

SENTRY INSURANCE A MUTUAL COMPANY, PLAINTIFF,
v.
BRAND MANAGEMENT INC., ALSO KNOWN AS BUDGET SERVICES, INC., DEFENDANT. SENTRY INSURANCE A MUTUAL COMPANY, PLAINTIFF,
v.
BUDGET SERVICES, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Roanne L. Mann, United States Magistrate Judge:

MEMORANDUM AND ORDER

In this consolidated action, plaintiff Sentry Insurance A Mutual Company ("Sentry") moves for sanctions and a compulsion order against defendants Hershel Weber ("Weber") and Budget Services, Inc. ("Budget") (collectively, "defendants") for failing to comply with this Court's August 10, 2012 Memorandum and Order.See Letter Motion for Discovery and Sanctions (Oct. 18, 2012) ("10/18/12 Mot."), Electronic Case Filing ("ECF") Docket Entry ("DE") #153. In addition, Sentry moves to reopen the deposition of Jacob Rosenberg, the designated Rule 30(b)(6) witness for Budget, and renews its request for production of Weber's unredacted tax returns. See 10/18/12 Mot. at 5-7. For the reasons set forth below, the Court grants in part and defers ruling in part on Sentry's requests.

BACKGROUND

These cases arise out of two Workers' Compensation policies (the "Policies") that Sentry issued to Budget and a related entity called Brand Management, Inc. ("Brand"), which is the defendant in the first-filed of these two actions.*fn1 The Court previously set forth a detailed procedural history of these actions in its August 10, 2012 Memorandum and Order ("8/10/12 M&O"), see DE #137, which resolved, among other things, a series of disputes that occurred during the final few months of discovery in the Budget Action.*fn2 Below, the Court recounts the history relevant to the current motion.

I. The 8/10/12 M&O

A. Sentry's March 30, 2012 Motion for Sanctions

On March 30, 2012, Sentry moved for sanctions and a compulsion order against Weber and Budget (the "3/30/12 Sanctions Motion"). See 8/10/12 M&O at 8-11. The 3/30/12 Sanctions Motion was based on defendants' alleged failure to produce discovery in compliance with this Court's February 1, 2012 order (the "2/1/12 Order"), DE #32 in Budget, 11-CV-3966. See 8/10/12 M&O at 8-11. The 2/1/12 Order had directed defendants to produce, among other things, documents related to non-party entities that were associated with defendant Weber and that were insured under the Policies (collectively referred to as the "Insured Weber Entities"), and had ordered the production of a sworn statement from Weber to the extent he claimed not have possession, custody or control of any of the demanded documents. See 8/10/12 M&O at 8. The Court had also ordered defendants to produce "the contract between Brand and Budget" and "redacted copies of Weber's and Budget's tax returns."See id.

In its 8/10/12 M&O, the Court concluded that defendants had violated the 2/1/12 Order. See 8/10/12 M&O. First, defendants did not timely produce documents related to the Insured Weber Entities, and the minimal documents they did produce were woefully inadequate. See id. at 9-10. Nor did Weber produce his redacted tax returns or an affidavit concerning his discovery compliance, as directed by the Court. See id. at 9. Having concluded that Weber and Budget willfully violated this Court's 2/1/12 Order, it directed that defendants, by August 22, 2012: (1) fully comply with the 2/1/12 Order, including the production of Weber's redacted tax returns; (2) "provide an affidavit or affirmation [by Weber] attesting to the fact that he has produced all responsive documents in his possession, control or custody" (hereinafter, the "Weber Affidavit"); and (3) produce"any contract (whether or not presently in force) between Budget and Brand." See 8/10/12 M&O at 10. "If no contract ever existed," Weber was required to attest to that fact in his sworn statement. See id.

As a result of defendants' blatant violation of the 2/1/12 Order, this Court awarded Sentry the attorney's fees and costs it had incurred as a result of defendants' noncompliance.*fn3

B. Sentry's April 10, 2012 Motion to Compel

The 8/10/12 M&O also resolved Sentry's April 10, 2012 motion to compel defendants to produce the unredacted tax returns of the Insured Weber Entities ("4/10/12 Motion to Compel"). See 8/10/12 M&O at 12. In its 4/10/12 Motion to Compel, Sentry requested that, as a consequence of Weber's failure to comply with the 2/1/10 Order requiring him to produce redacted tax returns, the Court compel Weber instead to produce unredacted tax returns. See 8/10/12 M&O at 12.

The Court granted in part and denied in part Sentry's 4/10/12 Motion to Compel. Specifically, the 8/10/12 M&O compelled defendants to produce, by August 22, 2012, "redacted tax returns for the Insured Weber Entities that are in the custody, control or possession of the [defendants]." See 8/10/12 M&O at 15 (emphasis in original). The Court further directed that, to the extent that defendants did "not have all of the Insured Weber Entities' tax returns in their possession, custody or control, Weber must provide a statement under oath to that effect by August 22, 2012, and must state whether those documents exist and, if so, where they are located." Id. The Court declined to compel the production of Weber's unredacted tax returns. See id.

C. Sentry's July 25, 2012 Motion to Reopen Deposition of Jacob Rosenfeld

In its 8/10/12 M&O, the Court also addressed the July 25, 2012 motion by Sentry to reopen the deposition of Jacob Rosenfeld, the outside accountant for defendants and the Insured Weber Entities. See 8/10/12 M&O at 15-16. Rosenfeld, who was represented by defendants' counsel, had appeared for a deposition pursuant to a subpoena but failed to produce subpoenaed documents (the "Rosenfeld Documents"), resulting in a compulsion order by this Court. See id. After Sentry received and reviewed the Rosenfeld Documents, it sought to reopen Rosenfeld's deposition on the basis that the Rosenfeld Documents raised new issues concerning defendants' finances. The Court granted Sentry's motion, although it limited the deposition to three hours and to questions concerning the Rosenfeld Documents. See 8/10/12 M&O at 17.

II. Defendants' Response to the 8/10/12 M&O and Sentry's Current Motion

Not surprisingly, given the history of this matter, defendants could not manage to comply with the Court's 8/10/12 M&O without judicial intervention. See, e.g., Sentry's Letter Regarding Defendants' August 22 Letter (Aug. 23, 2012), DE #143; Defendants' Letter Responding to Sentry's August 23 Letter (Aug. 23, 2012), DE #144.Essentially, defendants took it upon themselves, without seeking leave of the Court, to make available a partial production of the documents required under the 8/10/12 M&O on the date they were due, August 22, 2012, but declined to release them that day for copying. See Memorandum and Order (Sept. 10, 2012) ("9/10/12 M&O") at 3, DE #152. As detailed in this Court's September 10, 2012 Memorandum and Order, defendants did not act in good faith and delayed releasing that partial production for another two weeks, see id. at 2-3, and eventually had to be compelled by this Court -- again -- to produce all documents responsive to the Court's 8/10/12 M&O by the close of business on ...


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