UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

G&E REAL ESTATE, INC., Plaintiff, v. Civil Action No. 14-418 (CKK) AVISON YOUNG–WASHINGTON, D.C., LLC, et al., Defendants.

MEMORANDUM OPINION AND ORDER (October 18, 2017)

Pending before the Court is Defendants’ Motion for Sanctions, ECF No. 168 (“Sanctions

Mot.”). That motion concerns the belated production of approximately 16,000 emails from the

mailbox of Defendant Bruce McNair (the “McNair Emails”), which were stored on a computer

server previously owned and operated by non-party Grubb & Ellis. Having reviewed the

pleadings, 1 the relevant legal authorities, and the record for purposes of the pending motion, the

Court finds that the sanctions sought by Defendants are not appropriate. Nonetheless, given the

belated production of indisputably relevant materials, the Court shall reopen the discovery period

in this matter, so that the parties may engage in any additional discovery and motion practice that

is reasonably necessitated by the new materials. Accordingly, the Court shall DENY the Motion

1 The Court’s consideration has focused on the following documents, and attached exhibits and declarations:

• Defs.’ Mem. in Supp. of Mot. for Discovery Sanctions, ECF No. 168-2 (“Def.’s Mem.”); • Pl.’s Brief in Opp’n to Defs.’ Mot. for Sanctions and in Supp. of Pl.’s Cross-Motion for Leave to Supplement Trial Exhibits, ECF No. 171-2 (“Pl.’s Mem.”); • Defs.’ Reply in Supp. of Mot. for Discovery Sanctions and Opp’n to Cross Mot. to Supplement, ECF No. 175 (“Defs.’ Reply Mem.”); • Pl.’s Reply in Supp. of Cross-Mot. for Leave to Supplement Trial Exhibits, ECF No. 181 (“Pl.’s Reply Mem.”). 1 for Sanctions, ECF No. 168, and shall DENY WITHOUT PREJUDICE any pending motions

related to the pretrial phase of this case.

BACKGROUND

In October 2014, then Plaintiff’s counsel Saul Ewing extracted and reviewed the 16,000

McNair Emails, and produced 458 emails on October 24, 2014 which it deemed responsive to

Defendants’ discovery requests. Gill Decl. ¶ 7. A Revised Joint Discovery Plan filed on October

10, 2014, ECF No. 100, states the following:

Plaintiff has just obtained electronic documents which appear to consist primarily of emails and email attachments in .pst form. These are being processed for production in this case. Plaintiff expects to produce these documents by October 17, 2014. Plaintiff contends it obtained the claims in this case as part of the assets of the real estate brokerage firm Grubb & Ellis in the context of Grubb & Ellis’s bankruptcy. Grubb & Ellis is no longer a going concern. Plaintiff further contends that obtaining electronic data which belonged to Grubb & Ellis presents special challenges because that data is not readily retrievable. Plaintiff is in the process of confirming that no further document production is expected, but cannot know that until approximately October 17, 2014. Only after Plaintiff represents to Defendants that it has completed its document production will Defendants be in a position to evaluate the document production and pose any challenges thereto, including the possible need for additional efforts to retrieve and produce Grubb & Ellis documents that Plaintiff contends it is having difficulty locating and/or producing.

(Emphasis added.) According to Plaintiff, the first italicized portion of this paragraph refers to the

McNair Emails, of which 458 were produced, while the second italicized portion refers to other

electronic data. Gill Decl. ¶¶ 10–11. Following the production of the 458 McNair Emails,

Defendants did not move to compel, and the issue laid dormant until the parties began their pretrial

preparations. The discovery period closed on February 10, 2015. Minute Order (Dec. 8, 2014).

In March 2017, an associate with Plaintiff’s current counsel, Nixon Peabody, sent an email

to an associate with Saul Ewing asking whether Nixon Peabody had received all of the documents

that had been produced in this case. Kurow Decl. ¶ 5. In response, the Nixon Peabody associate

received a production log that included an entry described as “McNair Emails,” and which was

2 dated October 6, 2014. Id. ¶ 10. The party associated with the log entry was “McNair.” Id.

According to the Nixon Peabody associate, she was advised by the Saul Ewing associate that the

production log was an accurate representation of the materials produced in this litigation. Id. ¶ 11.

On March 31, 2017, Plaintiff’s counsel sent a letter to Defense counsel stating that certain

documents “produced by Bruce McNair . . . were turned over in native format only and were never

imaged and labeled with any sort of document identifiers[,]” and proposed an identifier for “Bruce

McNair’s production totaling 16,410 documents . . . .” Sanctions Mot., Ex. 2. On April 3, 2017,

Plaintiff’s counsel reiterated “that these are documents previously produced by the parties other

than Plaintiff, including Bruce McNair . . . .” Id., Ex. 3. These documents were sent to Defense

counsel on April 12, 2017. Kurow Decl. ¶ 16. On April 20, 2017, Defense counsel informed

Plaintiff’s counsel that “it would appear that the documents recently bates labeled and produced to

us . . . significantly exceed the volume of documents produced in this case as a whole.” Sanctions

Mot., Ex. 4. This discrepancy was explained by Plaintiff’s counsel two weeks later via email:

We have determined after our conversation with you that there were approximately 16,000 emails labeled “McNair Emails” that Saul Ewing improperly included on the Plaintiff’s production log. The production log indicated that the emails had been produced by McNair. Upon further investigation, we have determined that the emails were not produced by McNair and that approximately 458 emails were included in the Grubb & Ellis October 24, 2014 production. It is unclear why Saul Ewing did not produce any other emails from this collection. In any event, we have provided you with the entire universe of emails that the client originally provided to Saul Ewing. Given that the information we were provided originally was incorrect, Plaintiff is willing to reproduce those emails with a corrected Bates-label identifying Grubb & Ellis as the source. Please advise if you would like us to re- label these documents. Subject to court approval, Plaintiff intends to use certain of these emails as indicated on the exhibit list that has been provided to you.

Id., Ex. 8; see also Ex. 9, at 8–9 (in response to Defendants’ objections to the pre-trial statement,

providing the same explanation for the non-production of the 16,000 McNair Emails).

3 Separately, beginning in March 2017, Plaintiff’s parent company produced 32,000

documents in a related action in the District of Columbia Superior Court (the “Superior Court

Documents”), Solis Decl. ¶¶ 10–12, which Defendants contend are “in large part [from] the Grubb

& Ellis e-mail server . . . [,]” Defs.’ Mem. at 11. According to Plaintiff, in “reviewing and

processing the productions in the Superior-Court Litigation, it became apparent to Nixon Peabody

that documents that were produced, or were going to be produced, to the defendants in that case

had not been produced in this case.” Solis Decl. ¶ 13. Nixon Peabody has since provided the

unproduced Superior Court Documents to Defendants in this case. Id. ¶ 14.

Plaintiff seeks to use as trial exhibits 15 of the previously unproduced McNair Emails; 17

of the previously unproduced Superior Court Documents; as well as attachments to a previously

produced email from Defendant Roehrenbeck that were not themselves produced; and a Grubb &

Ellis “employee handbook.” Pl.’s Mem. at 9–10.

DISCUSSION

Defendants pursue sanctions pursuant to Federal Rules of Civil Procedure 37(b)(2) and

37(c)(1), as well as the Court’s “inherent power to protect its integrity and prevent abuses of the

judicial process.” Defs.’ Mem. at 15, 19 (citing Webb v. District of Columbia,

(D.C. Cir. 1998) (internal quotation marks and alteration omitted)). Under Rule 37(b)(2),

Defendants seek the ultimate sanction of dismissal, while pursuant to Rule 37(c)(1), they seek the

exclusion from trial of the belatedly produced materials. In the Court’s view, neither sanction is

appropriate under the factual circumstances recited above.

First, as a technical matter, Defendants may not obtain the sanction they seek pursuant to

Rule 37(b)(2) because the application of that rule is triggered only by the violation of a discovery

order. Fed. R. Civ. P. 37(b)(2)(A); Webb,

n.16 (“authority to impose sanctions

4 under Rule 37(b)(2) is triggered only by the violation of a production order issued by the district

court”). Furthermore, the United States Court of Appeals for the District of Columbia Circuit

(“D.C. Circuit”) has cautioned that “dismissal is a drastic step, normally to be taken only after

unfruitful resort to lesser sanctions.” Shepherd v. Am. Broadcasting Cos., Inc.,

(D.C. Cir. 1995) (internal quotation marks omitted). To justify the sanction, the Court “not only

must find clear and convincing evidence of misconduct but also must provide a specific, reasoned

explanation for rejecting lesser sanctions, such as fines, attorneys’ fees, or adverse evidentiary

rulings.” Id.; see also Wash. Metro. Area Transit Comm’n v. Reliable Limousine Serv., LLC,

(D.C. Cir. 2015) (severe sanction like default judgment “is inappropriate unless the

litigant’s misconduct is accompanied by willfulness, bad faith, or fault” (internal quotation marks

omitted)).

Here, the very notion that Plaintiff engaged in purposeful misconduct with respect to the

McNair Emails is belied by the reality that Plaintiff inadvertently produced the 16,000 McNair

Emails. The paper trail associated with this production strongly suggests that Plaintiff’s counsel

simply erred in its determination that the 16,000 McNair Emails were previously produced, and

only after the emails were out in the open, did Plaintiff’s counsel realize their mistake in not

producing them earlier. There is no “clear and convincing evidence” that Plaintiff sought to hide

these emails, or to engage in any other type of misconduct with respect to the emails that could

warrant the sanction of dismissal. Indeed, the record suggests that Defense counsel was aware that

additional emails may exist on the Grubb & Ellis server in addition to the 458 that were produced

in October 2014, but chose not to pursue the issue until the 16,000 McNair Emails were

inadvertently produced by Plaintiff’s counsel in April 2017.

5 This leaves Defendants’ request for sanctions pursuant to Rule 37(c)(1), which provides

that “[i]f a party fails to provide information or identify a witness as required by Rule 26(a) or (e),

the party is not allowed to use that information or witness to supply evidence on a motion, at a

hearing, or at a trial, unless the failure was substantially justified or is harmless.” In turn, Rule

26(e)(1) provides that “[a] party . . . who has responded to an interrogatory, request for production,

or request for admission . . . must supplement or correct its disclosure or response . . . in a timely

manner if the party learns that in some material respect the disclosure or response is incomplete or

incorrect, and if the additional or corrective information has not otherwise been made known to

the other parties during the discovery process or in writing . . . .” Under Rule 37(c)(1), the “sanction

of preclusion is ‘automatic and mandatory’ unless the party can show that the failure to disclose

was ‘either substantially justified or harmless.’” Armenian Assembly of Am., Inc. v. Cafesjian,

(D.D.C. 2010) (Kollar-Kotelly, J.) (citing Walls v. Paulson,

, 53–

54 (D.D.C. 2008)).

To succeed, Defendants’ request pursuant to Rule 37(c)(1) must overcome several technical

hurdles. First, Defendants must show that they were “not otherwise made known” of the McNair

Emails in earlier stages of this litigation. Otherwise, Plaintiff did not fail to comply with Rule

26(e), and is not subject to sanctions for that failure under Rule 37(c)(1). This may have proved a

difficult challenge, given the record evidence that Defendants were aware of the Grubb & Ellis

emails, and did not push for additional productions from that data source. See Elion v. Jackson,

, 10 n.9 (D.D.C. 2008) (finding witness’s testimony admissible because the

witness’s name had been provided in response to an interrogatory, thereby putting the opposing

party “on notice that [she] had discoverable information”). Furthermore, Rule 26(e) only requires

supplemental disclosure “in a timely manner . . . .” Here, the record suggests that Plaintiff’s former

6 counsel, Saul Ewing, made one set of relevancy determinations with respect to the McNair Emails,

while Plaintiff’s subsequent counsel, upon reviewing the documents, determined that additional

materials were responsive to Defendants’ discovery requests. Contemporaneously with this

subsequent determination, Plaintiff produced the entire volume of the McNair Emails, thereby

supplementing its prior disclosures.

Ultimately, whether Defendants could overcome these hurdles is an issue that the Court

leaves undecided. Given the indisputable fact that additional relevant materials have been

produced by Plaintiff after the close of the discovery period, the Court finds good cause for

reopening discovery in this case. Fed. R. Civ. P. 16(b)(4) (“A schedule may be modified only for

good cause and with the judge’s consent.”); see Watt v. All Clear Bus. Sols., LLC,

(D.D.C. 2012) (“Whether to reopen discovery is committed to the sound discretion of the

trial court.” (internal quotation marks and alterations omitted)). This will serve to nullify the

prejudices Defendants perceive to have resulted from the delayed production of the 16,000 McNair

Emails: the inability to conduct discovery based on the emails and to use the emails and related

discovery to support their motion for summary judgment. Defs.’ Mem. at 16–17. Consequently,

any failure to supplement will be rendered harmless, and sanctions are inappropriate pursuant to

Rule 37(c)(1). Fed. R. Civ. P. 37(c)(1) (sanctions must be imposed “unless the failure was

substantially justified or is harmless”); see also Burns v. Georgetown Univ. Med. Ctr.,

(D.D.C. 2015) 2 (Kollar-Kotelly, J.) (“Plaintiff can cure the harm caused by the

inadequate disclosures by promptly providing the two additional witnesses for depositions at this

point, as well as by responding to any interrogatories with respect to these witnesses.”); SD3, LLC

2 This decision is unaffected by the D.C. Circuit’s recent ruling in Burns v. Levy, --- F.3d ----, No. 16-7103,

(D.C. Cir. Oct. 13, 2017).

7 v. Rea,

(D.D.C. 2014) (“Another key consideration in determining the

prejudicial impact of the late disclosure [for purposes of Rule 37(c)(1)] is whether discovery can

be briefly reopened to allow the opposing party to depose the expert in response to the

supplement.”). Plaintiff concedes that additional discovery is an appropriate cure for its belated

production of the McNair Emails. Pl.’s Mem. at 17 (“If the Court permits, the Defendants may

conduct limited additional depositions.”).

Accordingly, the Court shall reopen discovery, which shall serve to cure the harms

Defendants have allegedly suffered as a result of the belated production, and which obviates the

need to impose any sanctions for the late production.

CONCLUSION AND ORDER

For the foregoing reasons, the Court DENIES the Motion for Sanctions, ECF No. 168, and

DENIES WITHOUT PREJUDICE any pending motions related to the pretrial phase of this case.

In particular, the following motions are DENIED WITHOUT PREJUDCE: ECF No. 170

(Motion to Strike); ECF No. 171 (Cross-Motion for Leave to Supplement Trial Exhibits); ECF

Nos. 186–194 (Motions in Limine).

The Court also DENIES WITHOUT PREJUDICE Plaintiff’s Motion for Leave to File

Second Amended Complaint Instanter, ECF No. 182. Plaintiff may renew this motion before the

close of the reopened discovery period, and the parties should include as part of their discovery

plan a schedule for briefing the motion to amend (to the extent this remains a contested issue, in

light of this Memorandum Opinion and Order).

The motions for leave to file documents under seal with docket numbers ECF No. 172,

ECF No. 178, and ECF No. 204, are GRANTED, as the affected documents are confidential

pursuant to the terms of a protective order in the related Superior Court Litigation.

8 The Court GRANTS Plaintiff’s Motion for Leave to File Exhibit A to Declaration of

Christina E. Kurow Instanter, ECF No. 174, as this merely corrects a prior filling error.

By NOVEMBER 24, 2017, the parties shall file a Joint Discovery Plan setting forth their

positions on what additional discovery is required, proposing a discovery schedule, and indicating

whether additional dispositive motion practice is appropriate.

SO ORDERED. /s/ COLLEEN KOLLAR-KOTELLY United States District Judge

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