Sheppard v . River Valley Fitness CV-00-111-M 09/27/01 P UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Mary Chris Sheppard and Robert Sheppard

v. Civil N o . 00-111-M Opinion N o .

River Valley Fitness One, L.P. d/b/a River Valley Club, et a l .

O R D E R

The plaintiffs have moved for sanctions against the

defendants and/or their counsel, William Edward Whittington, IV

(“Whittington”), as a result of alleged discovery abuses in this

matter and allegedly improper litigation tactics in the related

case of Aubin v . River Valley Fitness One L.P., et a l . , Civil N o .

00-110-B (“Aubin”), which has been closed. This Order addresses

both the plaintiffs’ request for sanctions pursuant to Fed. R.

Civ. P. 26(c) that was included in their April 2 3 , 2001 motion

for relief from protective order (document n o . 73) and the

plaintiffs’ June 1 8 , 2001 emergency motion for additional

sanctions pursuant to Fed. R. Civ. P. 37 and/or Local Rules

1.3(a) and 37.1(b) (document n o . 8 7 ) . I will discuss each of

1 these motions separately.1

April 2 3 , 2001 Motion for Sanctions

On May 2 3 , 2001, I granted the plaintiffs’ motion for

relief from a protective order that I had entered on behalf of

the defendants. The plaintiffs request sanctions, pursuant to

Fed. R. Civ. P. 26(c), on the grounds that the defendants had no

legitimate basis for seeking the protective order in the first

instance.

The defendants moved for the protective order on March 2 9 ,

2001, in order to prevent the disclosure in this case of

documents pertaining to the settlement of the Aubin matter. In

support of their motion, the defendants argued, inter alia, that

the settlement agreement with Aubin “has no bearing on any of the

issues in this case, and is not calculated to lead to admissible

1 Defendant River Valley Fitness One, L.P. filed for relief under the Bankruptcy Code of 1978, and this action was stayed with respect to that entity pursuant to

. There is a split in authority as to whether the court may sanction a debtor or hold it in contempt in light of the automatic stay. Compare In re Dumas,

(9th Cir. 1982), and David v . Hooker, Ltd.,

(9th Cir. 1977), with In re Atkins,

(D.Minn. 1994), and In re Cherry,

5 , 70 (E.D. P a . 1987). Here, however, I need not decide whether the automatic stay precludes the court from considering the plaintiffs’ motions for sanctions because I find that while defense counsel’s actions justify sanctions against him, nothing in the record demonstrates that sanctions are warranted as a result of the defendant debtor’s conduct.

2 evidence.” See Document n o . 6 7 . On March 3 0 , 2001, I entered an

order in favor of the defendants. The order directed the

defendants to produce the settlement documents to plaintiffs’

counsel, but precluded the disclosure of the documents to

plaintiffs or third parties except under limited circumstances.

Thereafter, on April 3 , 2001, Whittington sent plaintiffs’

counsel a number of documents pertaining to the Aubin settlement.

The documents demonstrate that Whittington misled the court

when he argued that the Aubin settlement is irrelevant to the

issues in this case. They also indicate that the true impetus

for seeking the protective order was Whittington’s desire to

conceal his conduct in this case and in the Aubin matter.

1. The Relevance of the Aubin Settlement

The settlement documents reveal that as a condition of the

settlement, Aubin agreed to assist the defendants “in good faith

and to the best of his ability,” and to “provide truthful

affidavits, on a continuing basis until the Sheppard case is

resolved.”2 Aubin is a material witness in this case. As

Whittington well knows, the settlement documents are directly

2 See Exhibit 1 to plaintiffs’ Sealed Motion for Relief Protective Order and Request for Sanctions Pursuant to Rule 26(c).

3 relevant to Aubin’s credibility.

2. Use of Settlement to Intimidate the Plaintiff

On October 6, 2000, Whittington wrote a letter to the

plaintiffs’ counsel in which he stated,

Attached please find a Stipulation to Judgment signed by Judge Barbadoro on October 4 in the amount of $50,000 in RVC’s3 favor in the Aubin case. It is clear that, when presented with the extensive evidence that we have compiled in support of our counterclaims against him and our motion for summary judgment on his own claims, Aubin and his counsel saw that the litigation had only one possible outcome.

The $50,000 judgment, and the likelihood that it will soon become public, prompt us to re-visit with you the subject of settlement.

Whittington then proposed that the plaintiffs settle this case,

in which the defendants have asserted substantially the same

counterclaims that they asserted in the Aubin action, by paying

the defendants $50,000.

The settlement documents show that in fact Aubin agreed to

pay only $100 of the $50,000 judgment. In his October 6 letter,

Whittington intentionally misled the plaintiffs into believing

that Aubin did commit to a $50,000 payment in order to intimidate

3 RVC refers to defendant River Valley Club. In the context of the Aubin settlement, the term “RVC” included all of the defendants in the Aubin case.

4 them into a $50,000 settlement in this case.4 It appears to this

court that the defendants’ quest for a protective order was

motivated at least in part by Whittington’s desire to conceal

this conduct.

3. Misrepresentations to the Court in the Aubin Case

Another reason for Whittington to maintain the secrecy of

the Aubin settlement documents was to conceal his deceptive

conduct in the Aubin case. The documents show that on August 1 6 ,

2000, the parties to the Aubin action reached a settlement in

principle. The parties specifically agreed, however, to delay

filing the stipulated judgment and other settlement documents

with the court until the court ruled on the defendants’ motion to

obtain discovery from two witnesses, Brannen and Panzica. The

4 Whittington also used the $50,000 judgment to persuade this court to adopt the defendants’ version of disputed facts. A footnote to the Defendants’ Memorandum Supporting Their Motion for Summary Judgment states, “While defendants are required to credit plaintiffs’ statements for purposes of summary judgment, they take strong issue with them on the merits. As set forth in RVC’s counterclaims, the true facts are that Sheppard’s “complaint” was wholly insincere and false . . . Aubin’s parallel suit in this Court . . . has already been resolved with judgment in RVC’s favor on all of Aubin’s claims, and judgment of $50,000 for RVC on its counterclaims against him.” Although technically accurate, this argument suggests an intention to mislead the court into believing that the facts so strongly favor the defendants that Aubin agreed to pay $50,000 to settle their counterclaims in his case.

5 parties further agreed to “jointly inform the Court we’re close

to settlement, jointly request it reschedule the status hearing

for late September, and tell the Court it would help the parties’

settlement negotiations to get a prompt ruling on the

Brannen/Panzica motions, which Aubin will now join.” This is in

fact what occurred.

A federal court has no jurisdiction over a matter absent an

actual case or controversy. “The settlement of an individual

claim typically moots any issues associated with it.” United

Airlines, Inc. v . McDonald,

(1977)(Powell, J.,

dissenting). Even if the Aubin matter was not settled on August

1 6 , it was settled prior to the court’s September 1 2 , 2000 ruling

on the Brannen motion.5 By that time, the defendants had signed

the release and satisfaction of judgment and the parties had

finalized an affidavit that Aubin had promised to provide as a

condition to settlement.

Both Whittington and the defendants insist that settlement

was contingent upon the defendants’ ability to corroborate

Aubin’s affidavit using the discovery obtained from Brannen and

Panzica. Nothing in the settlement documents even suggests that

5 The Panzica motion became moot on August 2 1 , 2001, and the court denied the motion on that basis.

6 this is true. Moreover, the defendants’ assertions are belied by

Whittington’s own concession at the June 1 3 , 2001 sanctions

hearing that the defendants would have settled without the

ability to corroborate Aubin’s testimony had the court denied

their discovery requests.

Whether or not counsel in the Aubin matter recognized that

the discovery motions had become moot as a result of the

settlement, the record demonstrates that they were not candid

with the court. Whittington, therefore, had a personal stake in

preventing the disclosure of the settlement documents in this

case.

Fed. R. Civ. P. 26(c) governs motions for a protective

order. It states that “[t]he provisions of Rule 37(a)(4) apply

to the award of expenses incurred in relation to the motion.”

Rule 37(a)(4) authorizes the court to require a party or its

attorney to pay reasonable expenses, including attorney’s fees,

incurred in connection with a motion for protective order that

was not substantially justified. Here, the defendants’ motion

for protective order was not substantially justified.

Accordingly, Whittington shall personally compensate the

plaintiffs for their expenses, including reasonable attorney’s

7 fees, incurred in connection with their opposition to and motion

for relief from the protective order.

June 1 8 , 2001 Emergency Motion for Sanctions

Following the sanctions hearing that occurred in connection

with the motion for relief from the protective order, the

plaintiffs moved for additional sanctions pursuant to Local Rules

1.3(a) and 37.1(b) and Fed. R. Civ. P. 3 7 . As grounds for their

motion, the plaintiffs assert: (1) both Whittington and the

defendants intentionally withheld discoverable material

information concerning the Aubin settlement; (2) new information

produced after the June 1 3 , 2001 sanctions hearing further

demonstrates that the Aubin case was settled prior to the court’s

rulings on the Brannen and Panzica discovery motions; (3) in a

May 3 0 , 2001 affidavit that was submitted to the court,

Whittington misrepresented the nature of his involvement in

preparing Aubin’s affidavit; (4) Whittington withheld documents

contradicting his representations to the court that the Aubin

settlement could not have been settled prior to October 2000

because the Aubin affidavit had to be reviewed in light of the

Brannen discovery; (5) Whittington failed to correct Aubin’s

trial deposition testimony regarding the preparation of the Aubin

8 affidavit; (6) defendants Joseph and Elizabeth Asch improperly

failed to produce a copy of the Aubin affidavit; and (7) the

Asches improperly used the Aubin settlement documents to

intimidate plaintiff Mary Chris Sheppard, and to discredit

Sheppard’s claims to third parties.

As discussed above, Whittington’s conduct in the Aubin

matter is significant here because it explains the true purpose

for seeking the protective order. To the extent that the

plaintiffs are requesting sanctions for Whittington’s actions in

the Aubin matter, however, their request is denied, as I have no

authority to consider that issue. See

(describing

jurisdiction and powers of federal magistrates).6 The

plaintiffs’ remaining arguments are addressed below.7

6 Because I find that the facts supporting the motion for additional sanctions do not justify a sanction that would be dispositive of the claims in this case, I reject the defendants’ argument that I lack jurisdiction to consider the motion due to the relief that the plaintiffs are seeking. Moreover, even if the record supported dismissal, I would have the authority to recommend to the district judge that the requested relief be granted. See

(b). 7 Although the court previously sanctioned Whittington for discovery abuse relating to his failure to produce documents concerning damages, it did not sanction him for failing to produce documents pertaining to the Aubin settlement. See Document N o . 8 8 .

9 1. Failure to Produce Discovery

On January 3 1 , 2001, the plaintiffs served upon the

defendants a request for documents pertaining to the settlement

between the defendants and Aubin. The discovery request defined

the term “documents” broadly, encompassing both paper documents

and electronic communications. After the defendants declined to

disclose the documents on the grounds that the production

deadline fell after the discovery cutoff date, the plaintiffs

moved to compel production. On March 2 2 , 2001, this court

granted the plaintiffs’ motion to compel production of the

documents on or before April 6, 2001, the date of Aubin’s trial

deposition. On April 3 , 2001, Whittington sent plaintiffs’

counsel documents concerning the Aubin settlement.

In a letter dated April 4 , 2001, plaintiffs’ counsel

reminded Whittington that the discovery request sought, among

other things, e-mail and other electronic communications.

Whittington does not recall receiving this letter. In June,

following a sanctions hearing before this court, plaintiffs’

counsel wrote to Whittington again and reminded him of the

defendants’ obligation to produce any responsive documents that

are stored on a computer. Subsequently, on June 1 5 , 2001,

10 Whittington produced settlement documents that he retrieved from

floppy disks located in his office. Whittington states that any

other documents that he may have created in connection with the

negotiation of the Aubin settlement have been lost or destroyed.

Notwithstanding Whittington’s habit of trying to obstruct

discovery in this case, I find that in this instance

Whittington’s failure to produce computer records and to retain

all drafts or other documents relating to the Aubin settlement

reflects a lack of diligence rather than an intentional effort to

abuse the discovery process. Nevertheless, Whittington’s failure

to fully comply with this court’s March 22 order has unfairly

prejudiced the plaintiffs by depriving them of the opportunity to

question Aubin about the contents of the documents. Pursuant to

Local Rules 1.3(a) and 37.1(b), therefore, I order Whittington to

pay $500 to the plaintiffs as a sanction.8 As a further sanction

for Whittington’s failure to timely comply with my order, I grant

the plaintiffs’ motion in limine to preclude Aubin from

8 Local Rule 37.1(b) states, “[w]hen the court rules on a discovery motion, the discovery requested or relief sought shall be provided within ten (10) days of the court order, unless the court specifies a different time.” Local Rule 1.3(a) authorizes the court to impose sanctions it deems appropriate for failure to comply with the Local Rules.

11 testifying in person at trial.9

2. Acts and Omissions Regarding Preparation of Aubin’s Affidavit

The plaintiffs accuse Whittington of perjuring himself in an

affidavit filed with the court by misrepresenting the nature of

his involvement in the preparation of the Aubin affidavit. They

further insist that Whittington improperly neglected to correct

Aubin’s trial deposition testimony regarding the affidavit.

Although Whittington’s poor judgment throughout the discovery

period has cast a shadow upon all of his activities in this case,

the record provides scant support for these accusations.

In a May 3 0 , 2001 affidavit, Whittington described his input

with respect to the Aubin affidavit as consisting of locating

information from documents and deposition testimony and providing

it to Aubin’s counsel. The plaintiffs suggest that Whittington

intentionally neglected to include the fact that he drafted the

first version of the affidavit because he was trying to hide that

information from the plaintiffs. Whittington’s role in creating

9 A party cannot avoid the consequences of its attorney’s unexcused conduct. See Damiani v . Rhode Island Hosp.,

2 , 16 (1st Cir. 1983). To the extent the defendants’ case suffers as a result of the sanction for Whittington’s failure to timely comply with my March 2 2 , 2001 order, the defendants must accept it as a result of their choice of counsel.

12 the affidavit is not inconsistent with his sworn testimony.

Preparing the initial draft of the Aubin affidavit can be seen as

a means of providing information to Aubin’s counsel.

Accordingly, nothing in the record confirms the plaintiffs’

suspicions about Whittington’s choice of language.

Nor does the record support the plaintiffs’ contention that

Whittington failed to correct inaccurate deposition testimony.

During his trial deposition, Aubin, who was represented by

counsel, was questioned about the preparation of his affidavit.

Aubin testified that his attorney assisted him in preparing the

affidavit, that he did not recall who typed the affidavit, and

that to his knowledge, Whittington had input regarding topics

addressed in the affidavit but not regarding the information

contained in those topics. In fact, the record shows that

Whittington typed the initial version of the affidavit and had

significant input regarding the topics contained in the

affidavit. This evidence, however, is not inconsistent with

Aubin’s testimony regarding his own knowledge of events.

3. The Defendants’ Alleged Improprieties

The plaintiffs have asked the court to dismiss the

defendants’ counterclaims and enter a default judgment against

13 the defendants with respect to the plaintiffs’ claims. The

plaintiffs contend that these extraordinary sanctions are

justified because defendants Joseph and Elizabeth Asch failed to

produce a copy of the Aubin affidavit and intentionally misused

the Aubin settlement documents to intimidate the plaintiff and

third party witnesses. There is insufficient evidence, however,

to show that the Asches intentionally withheld discovery or

otherwise engaged in sanctionable behavior.

The evidence shows that during the course of the litigation,

Whittington forwarded a draft of the Aubin affidavit to Joseph

Asch. The plaintiffs argue that Asch failed to produce this

document, which was responsive to the plaintiffs’ document

request. There is no evidence, however, that Asch recalled

receiving the document or was aware that it should have been

disclosed to the plaintiffs. Under these circumstances, I can

find no justification for imposing sanctions upon the defendants.

Additionally, the evidence concerning Elizabeth Asch’s use

of the settlement documents is insufficient to warrant sanctions

against the defendants. Specifically, the plaintiffs allege that

Elizabeth Asch wrote a letter to the River Valley Club limited

partners in which she mischaracterized the Aubin settlement by

14 suggesting that the Aubin court rejected Aubin’s factual claims

and accepted the defendants’ counterclaims. The plaintiffs state

that some of the limited partners to whom the letter was directed

were expected to testify on behalf of Sheppard in this case, and

suggest that the letter, as well as a second letter

mischaracterizing the settlement, constituted an attempt to

discredit the plaintiff. Although Asch’s letters are misleading

because they suggest that the Aubin case was resolved on the

merits rather than through settlement, the record is void of any

evidence regarding Asch’s motivation for writing the letters, the

identity of those who actually read the letters, and the impact,

if any, that the letters had on potential witnesses. Moreover,

nothing in the record supports the plaintiffs’ contentions that

the letters were part of a coordinated effort to defraud the

plaintiffs.

In this circuit, the sanction of dismissal “‘is a harsh

sanction,’ which runs counter to our ‘strong policy favoring the

disposition of cases on the merits’.” See Figueroa Ruiz v .

Alegria,

(1st Cir. 1990)(quoting Richman v .

General Motors Corp.,

(1st Cir. 1971); Zavala

Santiago v . Gonzalez Rivera,

(1st Cir. 1977)).

15 Here, there is insufficient evidence of any action by the

defendants that would justify sanctions, much less the severe

sanctions of dismissal and default that the plaintiffs request.

Conclusion

Whittington’s efforts to obstruct discovery, mislead the

plaintiffs, and conceal his own improper conduct has hindered the

plaintiffs’ ability to conduct a thorough trial deposition and

has caused unnecessary expense and unfair delay. This court will

not tolerate such a deviation from the standards which govern

members of the legal profession. The plaintiffs’ motion for

sanctions contained in their motion for relief from protective

order (document n o . 73) is granted. The plaintiffs’ emergency

motion for additional sanctions (document n o . 87) is granted in

part and denied in part. Justice requires that Whittington be

sanctioned in accordance with this Order.

SO ORDERED.

James R. Muirhead United States Magistrate Judge

Date: September 2 7 , 2001 cc: Lauren S . Irwin, Esq. William Edward Whittington, IV, Esq. Joseph F. Daschbach, Esq.

16