Steinhauser et.al v. City of St.Paul

Taken from www.ademocracy.blogspot.com 20Dec07

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Frank J. Steinhauser, III, et al., Civil No. 04-2632 JNE/SRN

Plaintiffs,
v. DEFENDANTS’ RESPONSE
TO PLAINTIFFS’ OBJECTIONS

City of St. Paul, et al., TO MAGISTRATE NELSON’S
Defendants. ORDER OF NOVEMBER 13, 2007

Sandra Harrilal, et al., Civil No. 05-461 JNE/SRN
Plaintiffs,
v.
Steve Magner, et al.,
Defendants.
Thomas J. Gallagher, et al., Civil No. 05-1348 JNE/SRN
Plaintiffs,
v.
Steve Magner, et al.,
Defendants.

INTRODUCTION
Plaintiffs sought sanctions for Defendant’s alleged spoliation of evidence.

Plaintiffs claim that Defendants destroyed Truth-in-Sale of Housing Reports (TISH Reports) and e-mails. Plaintiffs also claim that Defendants should have disclosed
documents Plaintiffs received from an anonymous source. In a November 13, 2007,
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2 Order (04-2632, ECF Doc. No. 13; 05-461 ECF Doc. No. 111; 05-1348, ECF Doc. No.105) the Court denied
Plaintiffs’ motion without prejudice. In a December 10, 2007,
Order, (04-2632, ECF Doc. No. 148; 05-461 ECF Doc. No. 125; 05-1348, ECF Doc. No.119) the Court set a new scheduling order allowing Plaintiffs until February 15,
2000, to file any subsequent sanctions motion. Plaintiffs now appeal the Court’s November 13,
2007, Order. Plaintiffs appeal should be denied in its entirety as the Court’s Order was in accordance with the law.

STANDARD OF REVIEW
Great deference is given to a magistrate judge’s orders. Reko v. Creative Promotions, Inc., 70 F. Supp. 2d 1005, 1007 (D. Minn. 1999) (stating standard of review
is “extremely deferential”). A district court “must affirm the order of the magistrate judge
unless it is clearly erroneous or contrary to law.” Regents of the Univ. of Minn. v. Glaxo
Wellcome, Inc., 58 F. Supp. 2d 1036, 1037 (D. Minn. 1999). See Banbury v. Omnitrition
Int'l, Inc., 818 F. Supp. 276, 279 (D. Minn. 1993) (utilizing clearly erroneous or contrary
to law standard). See also 28 USCS § 636(b)(1)(A) (providing review by the district
court judge “where it has been shown that the magistrate’s [magistrate judge’s] (sic) order
is clearly erroneous or contrary to law”); Fed. R. Civ. P. 72(a) (stating same); D.Minn. LR
72.2(a) (stating same). “A finding is ‘clearly erroneous’ when although there is evidence
to support it, the reviewing court on the entire evidence is left with the definite and firm
Case 0:04-cv-02632-JNE-SRN Document 150 Filed 12/20/2007 Page 2 of 10
3
conviction that a mistake has been committed.” Chakales v. Commissioner, 79 F.3d 726,
728 (8th Cir. 1996) (internal quotation omitted).
ARGUMENT
I. STANDARD FOR IMPOSING SANCTIONS
A. Fed. R. Civ. P. 37
Plaintiffs’ motion was based primarily upon a request that the court impose
sanctions by exercising its authority under Fed. R. Civ. P. 37. See November 13, 2007,
Order at p. 4 fn. 1. However, “[i]n order to impose sanctions under Rule 37, there must
be an order compelling discovery, a willful violation of that order, and prejudice to the
other party.” Chrysler Co. v. Carey, 186 F.3d 1016, 1019 (8th Cir. 1999). “The
prerequisite of a Rule 37(a) order insures that the party failing to comply with discovery
is given adequate notice and an opportunity to contest the discovery sought prior to the
imposition of sanctions.” Dependahl v. Falstaff Brewing Co., 653 F.2d 1208, 1213 (8th
Cir. 1981). It is undisputed that Defendants have not violated any Court Order
compelling discovery. Therefore, the Court was correct when it did not sanction
Defendants pursuant to Fed. R. Civ. P. 37.
B. Court’s Inherent Authority
“The court has the inherent authority to sanction a party or its counsel that acts ‘in
bad faith, vexatiously, wantonly, or for oppressive reasons.’” Steinlage v. Mayo Clinic
Rochester, 235 F.R.D. 668, 674 (D. Minn. 2006) (quoting Chambers v. NASCO, Inc., 501
Case 0:04-cv-02632-JNE-SRN Document 150 Filed 12/20/2007 Page 3 of 10
4
U.S. 32, 44 (1991) and Jaquette v. Black Hawk County, 710 F.2d 455, 462 (8th Cir.
1983)). See also VanDanacker v. Main Motor Sails Co., 109 F. Supp. 2d 1045, 1046 (D.
Minn. 2000) (requiring bad faith prior to imposition of sanctions under inherent power).
“Exercise of this inherent authority requires a finding of bad faith and addresses conduct
that constitutes willful abuse of judicial process or fraud upon the court.” Steinlage, 235
F.R.D. at 674, (citing Stevenson v. Union Pac. R. Co., 354 F.3d 739, 751 (8th Cir. 2004)
and Jaquette, 710 F.2d at 462). See also Willhite v. Collins, 459 F.3d 866, 870 (8th Cir.
2006) (citing Roadway Express, Inc. v. Piper, 447 U.S. 752, 766-67 (1980)) (stating
sanction under inherent authority permissible upon finding of bad faith). “The court
exercises its inherent power to sanction cautiously and with ‘restraint and discretion.’”
Steinlage, 235 F.R.D. at 674, (citing Chambers, 501 U.S. at 44 and Pls.’ Baycol Steering
Comm. v. Bayer Corp., 419 F.3d 794, 802 (8th Cir. 2005)). It is undisputed that the Court
has the inherent authority to sanction a party that acts in “bad faith.” There is no evidence
that Defendants acted in “bad faith” and the Court’s decision to deny Plaintiffs’ motion
for sanctions (without prejudice) should be affirmed.
II. PLAINTIFFS FAILED TO ESTABLISH PREJUDICE
Plaintiffs have not shown any prejudice based on Defendants’ actions (or
inactions). The Court properly recognized that any sanction for the spoliation of evidence
requires a finding of prejudice. See November 13, 2007, Order at pp. 3-4. Plaintiffs
agree that a finding of prejudice is required. Id. at p. 3 (citing Plaintiffs’ Joint Memo. of
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5
Law in Support of Motion for Sanctions at p. 11). See also Plaintiffs’ Joint Objections to
Magistrate’s Order of November 13, 2007, at pp. 6 & 8 (arguing existence of prejudice).
Plaintiffs also agree with the Court’s determination that the requested discovery must be
relevant before prejudice can be found. See Id. at pp. 7-8 (discussing relevance of TISH
reports and e-mail); November 13, 2007, Order at pp. 4-6 (discussing Plaintiffs’ inability
to establish existence of relevant evidence in allegedly destroyed documents). See also
Zubulake v. UBS Warburg L.L.C., 220 F.R.D. 212, 217 (S.D.N.Y. 2003) (stating a party
only has a duty to preserve “unique, relevant evidence that might be useful to an
adversary”) (emphasis added); Gates Rubber Co. v. Bando Chemical Indus., 167 F.R.D.
90, 104 (D. Colo. 1996), quoted in LEXIS-NEXIS v. Beer, 41 F. Supp. 2d 950, 955 (D.
Minn. 1999) (stating moving party “must establish a reasonable possibility, based on
concrete evidence rather than a fertile imagination, that access to the [allegedly destroyed
material] would have produced [favorable] evidence”) (emphasis added). The party
opposing a motion for sanctions must also have been on notice that the destroyed
evidence was relevant. Stevenson v. Union Pacific Railroad Co., 354 F.3d 739, 749-750
(8th Cir. 2004) (finding actual notice of relevance of destroyed documents due to a
specific document request).
A. Truth-in-Sale of Housing Reports
“Plaintiffs contend that ‘[d]estruction of TISH reports is prejudicial’ because
‘these reports will show the conditions of similar properties,’ but only assert that such
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6
‘TISH reports would show’ similarities among properties that were nevertheless treated
differently by Defendants and that ‘TISH reports of similarly situated property’ would be
‘likely to show that Plaintiffs’ properties were illegally targeted.’” See November 13,
2007, Order at p. 5 (emphasis in Order). Plaintiffs failed to show that TISH reports
contain the alleged information or even that the alleged differences in code enforcement
exist. Without this showing, no finding of prejudice can been made.
Furthermore, even if the Court follows Plaintiffs’ speculation to its logical
conclusion, the TISH reports for non-plaintiff properties at best would actually establish
that the market, not Defendants “forced [Plaintiffs] to sell their properties.” See
Plaintiffs’ Joint Objections to Magistrate’s Order of November 13, 2007 at p. 6. TISH
reports are only generated when a property is sold. See Defendants’ Opposition to
Plaintiffs’ Memorandum of Law in Support of Motion for Sanctions at p. 3. As a result,
the alleged content of the requested TISH reports would show that non-plaintiff
properties were for sale at the same time and had similar conditions as the Plaintiffs’
properties. The only alleged difference between non-plaintiff properties and Plaintiffs’
properties would be the alleged code enforcement action taken by the City. This would
suggest that market forces, not the City’s code enforcement action, was the force that
drove Plaintiffs and their neighbors to sell their properties. The Plaintiffs cannot claim
prejudice for the destruction of documents based upon a speculation that leads to
evidence which would be harmful to their case.
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7
Furthermore, Defendants maintain their position that TISH reports are irrelevant.
Neither party identified the reports in their 26(a)(1)(B) report. Defendants informed
Plaintiffs that the City had TISH reports generated by TISH evaluators who are not City
employees and have no connection to the City’s code enforcement or any City
department. See Defendants’ Opposition to Plaintiffs’ Memorandum of Law in Support
of Motion for Sanctions at pp. 8-12. The City explicitly informed Plaintiffs of its
retention policy for the irrelevant non-city documents. Id. Plaintiffs requested TISH
reports for the first time in January 2007 and were provided all TISH reports in the City’s
possession.
The Court was correct when it did not use its inherent authority to sanction
Defendants and instead found that a “finding of prejudice based on the destruction of
such reports must await a showing of the contents of any such reports that, following the
completion of discovery, remain inaccessible.” See November 13, 2007 Order at p. 5. In
deciding not to use its inherent authority to sanction Defendants for spoliation, the Court
correctly explained:
“[t]his is particularly true insofar as TISH reports are generated by property
inspectors who are independent of Defendant City. Defendants presumably
would have little if any logical motivation to attempt to destroy evidence
that, as they have consistently maintained, is generated and retained by such
independent inspectors and thus is incapable of being reliably destroyed by
the City, which would possess at most only its own copies.”
See November 13, 2007 Order at p. 8, fn 5.
Case 0:04-cv-02632-JNE-SRN Document 150 Filed 12/20/2007 Page 7 of 10
1 In order to facilitate this, Defendants provided Plaintiffs property address, the
owner of the property, evaluator’s name, and the evaluator’s contact information for all
TISH reports done between January 1, 2001, and January 31, 2003.
8
As the Court ordered “Plaintiffs may subpoena the inspectors to produce their reports,
with the cost being borne by the City.” See November 13, 2007 Order at p. 10.1
Plaintiffs have not been prejudiced and the Court’s Order denying Plaintiffs’ Motion for
Sanctions should be affirmed.
B. E-mails
Plaintiffs sought sanctions against Defendants for destroying e-mails yet, as the
Court found, “Defendants agreed to restore all available e-mails and are in the process of
recovering many of the deleted e-mails at issue.” See November 13, 2007 Order at p. 8.
Since the Court’s November 13, 2007, Order Defendants have turned over more than 1.5
million files restored from the City’s e-mail disaster recovery tapes. See Defendants’ Oral
Argument on December 10, 2007, Motion to Amend the Scheduling Order. The e-mails
that Defendants were unable to restore were sent to outside vendor Kroll Ontrack for
restoration. Id. The Court’s decision to deny Plaintiffs’ motion for sanctions when
Plaintiffs have not reviewed any e-mails at the time of their motion should be affirmed.
Plaintiffs claim they are prejudiced by the City’s conduct pertaining to e-mail
because Plaintiffs are now faced with the need to review e-mail long after depositions are
over. See Plaintiffs’ Joint Objections to Magistrate’s Order of November 13, 2007, at p.
Case 0:04-cv-02632-JNE-SRN Document 150 Filed 12/20/2007 Page 8 of 10
9
9. Plaintiffs, however, did not even seek the e-mail production until long after they
chose to take more than forty depositions.
Now Plaintiffs claim prejudice because the e-mails are being produced pursuant to
a protective order that prevents the individual Plaintiffs from assisting in the e-mail
review. See Plaintiffs’ Joint Objections to Magistrate’s Order of November 13, 2007, at
p. 9. It is remarkable that Plaintiffs are actually claiming prejudice because they will have
to expend time and effort to review the documents they have insisted they need. The
Court’s Order is not clearly erroneous or contrary to law and should therefore be
affirmed.
C. Documents Anonymously Disclosed to Plaintiffs
Plaintiffs claim they were prejudiced by the City’s failure to produce a document
obtained by Plaintiffs from an anonymous source. See Plaintiffs’ Joint Objections to
Magistrate’s Order of November 13, 2007 at pp. 10-11. As Defendants have explained,
the City cannot produce documents that are not within its possession, custody or control.
See Defendants’ Opposition to Plaintiffs Memorandum of Law in Support of Motion for
Sanctions at p. 15. It is undisputed that the report Plaintiffs have obtained from an
anonymous source was not in the City’s possession when Plaintiffs made their document
request. See November 13, 2007, Order at p. 8. As a result, the City had no duty to
disclose the report. See Fed. R. Civ. P. 34(a). Furthermore, Defendants produced all
documents which were responsive to Plaintiffs’ request for documents related to Problem
Case 0:04-cv-02632-JNE-SRN Document 150 Filed 12/20/2007 Page 9 of 10
10
Properties 2000. See Defendants’ Opposition to Plaintiffs Memorandum of Law in
Support of Motion for Sanctions at p. 15. To the extent these disclosed documents
contain the same information as the progress report obtained from the anonymous source,
the Plaintiffs are not prejudiced.
CONCLUSION
For the foregoing reasons, Defendants respectfully request the Court affirm
Magistrate Nelson’s November 13, 2007, Order denying Plaintiffs’ Motion for Sanctions.
Dated: December 20, 2007 JOHN J. CHOI
Saint Paul City Attorney
By: /s/ Louise Toscano Seeba
LOUISE TOSCANO SEEBA, #292047
Assistant City Attorney
750 City Hall and Courthouse
15 West Kellogg Boulevard
St. Paul, MN 55102
(651) 266-8772
Attorneys for Defendants

Steinhauser-Harrilal-Gallagher v. City St.Paul CV05-461

UNITED STATES DISTRICT COURT

DISTRICT OF MINNESOTA

Frank J. Steinhauser, III, et al.,

Plaintiffs,

v.

City of St. Paul, et al.,

Defendants.

Civil No. 04-2632 (JNE / SRN)

ORDER

Sandra Harrilal, et al.,

Plaintiffs,

v.

Steve Magner, et al.,

Defendants.

Civil No. 05-461 (JNE / SRN)

ORDER

Thomas J. Gallagher, et al.,

Plaintiffs,

v.

Steve Magner, et al.,

Defendants.

Civil No. 05-1348 (JNE / SRN)

ORDER

Matthew A. Engel, 11282 86th Avenue North, Maple Grove, MN 55369, for Plaintiffs

Gallagher et al.; John R. Shoemaker, Shoemaker & Shoemaker, P.L.L.C., 7701 France Ave.

South, Suite 200, Edina, MN 55435, for Plaintiffs Steinhauser et al., and Harrilal et al.

Louise Toscai Seeba, Assistant City Attorney, 750 City Hall and Courthouse, 15 West

Kellogg Blvd., St. Paul, MN 55102, for Defendants.

2

SUSAN RICHARD NELSON, United States Magistrate Judge

This matter comes before the undersigned United States Magistrate Judge on Plaintiffs’

Joint Motion For Sanctions (Doc. No. 102 (No. 04-CV-2632), Doc. No. 73 (No. 05-CV-1348), &

Doc. No. 79 (No. 05-CV-461)). The matter has been referred to the undersigned pursuant to 28

U.S.C. § 636 and District of Minnesota Local Rule 72.1(a). For the reasons stated below, the

Court denies the motion without prejudice.

I. FACTUAL AND PROCEDURAL HISTORY

In these three related actions, several owners of rental properties within the City of St.

Paul (Plaintiffs) generally allege that the City of St. Paul and various municipal officials

(Defendants) illegally discriminated against them with respect to enforcing building codes

regarding Plaintiffs’ properties, which are allegedly occupied primarily by “protected-class”

renters.

Plaintiffs contend that they submitted discovery requests for e-mails, Truth-In-Sale-of-

Housing (“TISH”) reports, Problem Property 2000 documents and St. Paul Public Housing

Agency (“PHA”) documents. (Mem. at 2.) Plaintiffs assert that they learned that the TISH

reports continued to be subject to the City’s routine document destruction policy well after the

filing of the first Complaint in 2004. Plaintiffs further claim that they were told in early 2007

that all e-mails prior to December 2005 had been destroyed. Finally, they argue that Defendants

have failed to produce the PHA documents as well as other documents that an anonymous source

provided Plaintiffs.

Plaintiffs now move for sanctions, contending that Defendants have committed discovery

abuses–the spoliation of evidence and failures to produce relevant documents–that warrant

various sanctions including (1) an award of fees, costs and expenses, (2) prohibiting Defendants

3

from moving for summary judgment, (3) an adverse inference, and (4) the direction of factual

findings in favor of Plaintiffs. (Mem. at 20.) They also seek the ultimate sanction of a default

judgment. (Id. at 19, 20.)

II. DISCUSSION

Plaintiffs claim that Defendants destroyed certain types of relevant evidence and have

failed to produce other relevant evidence or produced it too late for Plaintiffs to use in

depositions. (Mem. at 2.) They contend that Defendants

destroyed irreplaceable vital evidence (TISH reports from 2001, 2002 and 2003,

and all emails and other electronically delivered communications proper to

December or 2005), suppressed discoverable material (shown by the five (5)

packets of undisclosed anonymous material), and failed to search for responsive

documents (PHA cooperative, police service, and other agreements with the City.)

(Id. at 9.) Plaintiffs assert that the destruction was improper because it occurred after Defendants

had notice of these actions, arguing that Defendants’ duty “to preserve evidence was triggered no

later tha[n] upon service of the Complaint in Steinhauser in May 2004.” (Id. at 9.) They also

note that Defendants should have been put on notice of the particular issues based on the “first

discovery requests [that] were served in the Steinhauser” case in November 2004. (Id. at 6.)

The Court agrees that Defendants should have initiated a litigation hold specifically

tailored to these particular actions when they were filed. The present question, however, is what

if any sanction is appropriate for the loss of any relevant evidence. As Plaintiffs themselves

acknowledge (Mem. at 11), sanctions for improper document destruction may not be imposed

until “the moving party can demonstrate that they have suffered prejudice as a result of the

spoliation.” E*Trade Sec. LLC v. Deutsche Bank AG, 230 F.R.D. 582, 592 (D. Minn. 2005).

Accord Stevenson v. Union Pacific R.R., 354 F.3d 739, 748 (8th Cir. 2004) (“There must be a

finding of prejudice to the opposing party before imposing a sanction for destruction of

1 Plaintiffs premise their motion in substantial part on Rule 37. (Mem. at 8.) But Rule

37 requires the existence of a court order, and a violation of that order, before sanctions may be

premised on its authority. E.g. Chrysler Co. v. Carey, 186 F.3d 1016, 1019 (8th Cir. 1999). No

such order exists here. Insofar as Plaintiffs’ motion is premised on the federal courts’ inherent

authority to impose sanctions in such matters, a sanction based on that authority would require a

showing of bad faith. E.g. Steinlage v. Mayo Clinic Rochester, 235 F.R.D. 668, 674 (D. Minn.

2006). On the present record, the Court cannot conclude at this juncture that Defendants’

discovery practices constitute bad faith.

4

evidence.”); Keefer v. Provident Life and Accident Ins. Co., 238 F.3d 937, 940 (8th Cir. 2000)

(stating that showing of prejudice is required for sanction of dismissal).1

Plaintiffs claim they were prejudiced by the failure of Defendants to produce–or to retain

so that they could be produced–several types of documents. To establish prejudice, however, a

movant must generally be able to show the contents of the documents at issue, that is, the

substance of the evidence to which they were improperly denied access. See LEXIS-NEXIS v.

Beer, 41 F. Supp. 2d 950, 955 (D. Minn. 1999) (noting that movant must show that destroyed

material “would have contained evidence pertinent to the present litigation”). As one court has

ruled, the movant “must establish a reasonable possibility, based on concrete evidence rather

than a fertile imagination, that access to the [destroyed material] would have produced evidence

favorable to his cause.” Gates Rubber Co. v. Bando Chemical Indus., 167 F.R.D. 90, 104 (D.

Colo. 1996), quoted in LEXIS-NEXIS, 41 F. Supp. 2d at 955. Moreover, the destroyed evidence

must be “substantially different in character from that of the preserved information.” LEXISNEXIS,

41 F. Supp. 2d at 955 (refusing to “presume that the overwritten computer data . . .

contained information any more sensitive, or evidence any more damning, that what [movant]

expected to find in the first place”).

Here, it remains at present undetermined what the missing documents at issue contained.

Although the Court recognizes that a movant might frequently be placed in a difficult position

2 The Court notes, however, that it is not suggesting that the mere similarity between the

condition of Plaintiffs’ properties and the condition of those against which Defendants did not

pursue the same level of code enforcement would, by itself, suffice to establish discriminatory

intent.

3 Defendants’ argument that the TISH reports need not be produced because they are

necessarily irrelevant is not well taken. Defendants contend the City does not use those reports

as a means of code enforcement and that such reports are created by housing inspectors and are

retained by the City only because it is “the licensing agency of the TISH evaluators.” (Mem. at

3.) Defendants also note that TISH inspectors are not City employees and that the City’s code

enforcement officers do not rely on the TISH reports. (Id. at 11.) But this does not preclude

their relevance–the standard for which in the discovery context is quite broad–if they would

show, as Plaintiffs contend, that properties against which Defendants vigorously enforced

housing codes and which were owned by protected class individuals did not differ from other

properties that Defendants did not target for such enforcement. Granted, Defendants appear not

to be the best source for obtaining such reports (compared to the TISH inspectors themselves),

but Defendants should produce whatever TISH reports they might have in their possession,

custody or control that would be responsive to Plaintiffs’ discovery requests. Fed. R. Civ. P.

34(a). Similarly, with respect to Plaintiffs’ arguments that Defendants destroyed or otherwise

5

having to establish the contents of documents that were never produced to it, particularly where

those documents were in fact destroyed, Plaintiffs have offered no proof in the form of testimony

or other documentary evidence (that is, documents other than those allegedly destroyed) as to

what the destroyed documents contained.

Rather, Plaintiffs seem to assume or speculate that the documents at issue contain

evidence supporting their claims. For example, Plaintiffs contend that “[d]estruction of TISH

reports is prejudicial” because “these reports will show the conditions of similar properties,” but

only assert that such “TISH reports would show” similarities among properties that were

nevertheless treated differently by Defendants and that “TISH reports of similarly situated

property” would be “likely to show that Plaintiffs’ properties were illegally targeted.” (Doc. No.

115 (Affidavit of Matthew Engel), ¶ 11 (emphasis added).) Such reports could be relevant.2 But

any finding of prejudice based on the destruction of such reports must await a showing of the

contents of any such reports that, following the completion of discovery, remain inaccessible.3

did not produce documents of the PHA, it appears that the PHA is not an agency of the

Defendant City and thus Defendants would not be the best source for obtaining PHA documents.

But, of course, Defendants would be obligated to produce any responsive relevant PHA

documents that nevertheless happen to be within their possession, custody or control.

4 The documents that Plaintiffs claim Defendants improperly destroyed–essentially broad

categories of e-mails and property inspection reports–are not of the type the destruction of which

itself would support an inference either that the documents necessarily (or even likely) contained

evidence supporting Plaintiffs’ claims or that their destruction was in bad faith. Thus any

finding of prejudice must await a showing of the contents of any documents that remain missing

(or otherwise not produced) once discovery is complete.

6

Likewise, Plaintiffs assert that the destruction of e-mails and other such electronic

documents and communications “is prejudicial to Plaintiffs” but then claim only that “[t]hose

emails may have shown Defendants knew and intended that their selectively aggressive code

enforcement operations . . . would have a discriminatory impact.” (Doc. No. 115, ¶ 23 (emphasis

added).) For the same reasons, Plaintiffs cannot establish prejudice with respect to the evidence

they claim was produced anonymously, but should have been produced by Defendants.

Plaintiffs simply assert, without any persuasive factual support, that “[i]t is reasonably likely that

this type of evidence would have been contained in the emails from 2002-2005.” (Id.)

In some situations, the nature of the documents themselves coupled with the extent and

circumstances of their destruction might support an inference of prejudice. See E*Trade, 230

F.R.D. at 592 (noting that “the substantial and complete nature of the destruction of the evidence

contained in the recorded telephone conversations and hard drives . . . . justifies a finding of

prejudice”); see also Stevenson v. Union Pacific R.R., 354 F.3d 739, 748 (8th Cir. 2004)

(concluding that finding of prejudice is warranted “by the nature of the evidence destroyed . . .

the very fact that it is the only recording of conversations . . . contemporaneous with the

accident”).

But here, no such inference is presently warranted.4 Granted, Defendants were remiss in

7

not imposing an appropriate formal litigation hold no later than when the first complaint was

filed. E*Trade Sec. LLC v. Deutsche Bank AG, 230 F.R.D. 582, 588 (D. Minn. 2005) (noting

that duty “to preserve evidence begins when a party knows or should have known that the

evidence is relevant to future or current litigation”). Defendants assert that they relied on their

existing document retention policy and that any requirement that they systematically retain every

document and other form of evidence would “cripple” them. (Mem. at 7 (citing Zubulake v.

UBS Warburg L.L.C., 220 F.R.D. 212, 217 (S.D.N.Y. 2003)).) But while one generally may

employ a document retention policy that permits the routine destruction of documents, once

litigation is likely–and certainly once it has begun–a party may not destroy relevant evidence,

even pursuant to a preexisting document retention policy that one has not superseded or

otherwise modified by an appropriate litigation hold. E*Trade Sec. LLC, 230 F.R.D. at 588-89.

Nevertheless, the record at this juncture does not support the conclusion that Defendants’

action (or inaction) was taken in bad faith. As Defendants note, they had a document retention

policy that systematically discarded particular documents after a fixed period of time. With

respect to the TISH reports, Defendants contend that they were under no obligation to retain all

of those reports because (1) Plaintiffs were informed in January 2005 of the three-year retention

policy but did not then request the reports, (2) Plaintiffs did not specifically request them until

January 2007, and (3) the reports are “completely irrelevant.” (Mem. at 8; see id. at 11.) In

short, Defendants argue that because Plaintiffs’ 2004 document requests did not specifically

mention TISH reports, Defendants should not be sanctioned for routinely destroying what they

viewed as irrelevant, particularly when they informed Plaintiffs that those reports were retained

for only three years and met with no specific request in response. (Id. at 9.) Defendants claim

that despite this notice, “Plaintiffs did nothing to obtain a review of the reports until 2007.” (Id.)

5 This is particularly true insofar as TISH reports are generated by property inspectors

who are independent of Defendant City. Defendants presumably would have little if any logical

motivation to attempt to destroy evidence that, as they have consistently maintained, is generated

and retained by such independent inspectors and thus is incapable of being reliably destroyed by

the City, which would possess at most only its own copies.

8

Although the Court does not agree with all of Defendants’ justifications for their discovery

conduct, the Court cannot presently conclude on this record that the failure to preserve the TISH

reports beyond the three years provided in the document-retention policy constitutes bad faith or

willful spoliation.5

With respect to deleted e-mails, Defendants agreed to restore all available e-mails and are

in the process of recovering many of the deleted e-mails at issue. Defendants note that they in

fact informed Plaintiffs that many of the e-mails have been restored from disaster recovery tapes

and “are being prepared for production to Plaintiffs.” (Mem. at 12.) Accordingly, a motion for

sanctions based on any alleged improper destruction of such e-mails must await (1) the

completion of that recovery process, and (2) a showing of prejudice resulting from the loss of

any relevant e-mails that could not be recovered.

Finally, Plaintiffs claim that documents they received from an anonymous source should

have been produced by Defendants. But Defendants contend that they cannot be sanctioned for

not producing what they did not possess. (Mem. at 15.) They assert that Plaintiffs received

documents from an anonymous source that has never been identified and that “it is undisputed

that these documents were not in Defendants’ possession.” (Id. at 4-5.) Defendants need only

produce responsive documents within their possession, custody or control. Fed. R. Civ. P. 34(a).

A motion for discovery sanctions can be entertained only if and when Plaintiffs could establish

that documents they received from any such anonymous source were drafted or received by

Defendants or otherwise within their possession, custody or control.

9

In sum, after having reviewed the entire record, The Rottlund Co., Inc., 222 F.R.D. 362,

374 (D. Minn. 2004) (“Sanctions are considered based on the record as a whole, rather than

merely considering the latest instance of misconduct that broke the camel’s back.”), the Court

concludes that there is no basis at this juncture to find that Defendants or their attorneys

improperly destroyed any evidence (or even intentionally permitted the routine destruction

pursuant to an otherwise valid policy to continue despite notice that the documents to be

destroyed were relevant to a pending action) for the purpose of obstructing discovery.

Most importantly for present purposes, Plaintiffs have not (yet) established prejudice

from the lack of access to any evidence they allege has been destroyed. This present lack of

prejudice is particularly decisive here, where Defendants are currently attempting to recover and

restore relevant e-mails and otherwise continue to produce at least some of the evidence that

Plaintiffs still seek and where some of the documents are best obtained from those non-parties

that originally generated them.

III. CONCLUSIONS

Because Plaintiffs have not, as yet, shown any prejudice resulting from the loss of any

relevant evidence, their motion for sanctions is premature and thus must be denied but without

prejudice to its renewal if and when Plaintiffs can demonstrate that they were prejudiced by the

destruction or non-production of responsive documents. Cf. LEXIS-NEXIS v. Beer, 41 F. Supp.

2d 950, 956 (D. Minn. 1999) (directing movant to renew its sanctions motion “at an appropriate

time later in the litigation”).

Several miscellaneous matters warrant brief discussion. With respect to the ongoing

production of documents, either pursuant to the City’s recovery of deleted e-mails or otherwise,

the parties shall meet and confer to establish a protocol governing the production of evidence

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that (1) prevents any disclosure of private data that would violate the Minnesota Data Practices

Act, (2) protects claims of privilege by incorporating a provision on inadvertent production, and

(3) designates all e-mails as “Attorney Eyes Only.” Once all of the remaining documents are

produced, the parties shall meet and confer regarding any additional depositions that need to be

taken in light of any such new evidence. If they are unable to agree, the Court will entertain an

appropriate motion. The Defendants shall pay the costs of any court reporter fees but Plaintiffs

may not recover attorney fees for any such depositions.

With respect to the TISH reports, at Plaintiffs’ election, the City may continue to produce

any relevant reports it might have in its possession, custody or control, or Plaintiffs may

subpoena the inspectors to produce their reports, with the costs being borne by the City. With

respect to the PHA documents, Plaintiffs should contact the appropriate individual at the PHA to

request that the Agency provide copies of the relevant documents. But if Defendants have such

documents in their possession, custody or control, Plaintiffs’ ability to obtain them elsewhere

does not preclude Defendants’ obligation to produce any such relevant documents responsive to

Plaintiffs’ discovery requests. Finally, with respect to the documents provided to Plaintiffs by an

anonymous source, the parties should meet and confer regarding whether the documents can be

authenticated.

IV. ORDER

Based on the foregoing, and all the files, records and proceedings herein, IT IS

HEREBY ORDERED that:

1. Plaintiffs’ motions for sanctions (Doc. No. 102 (No. 04-CV-2632), Doc. No. 73

(No. 05-CV-1348), & Doc. No. 79 (No. 05-CV-461) are DENIED WITHOUT PREJUDICE;

2. Plaintiffs’ request for their fees and costs incurred in bringing these motions is

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DENIED;

3. Defendants’ request for their fees and costs incurred in responding to this motion

is DENIED.

Dated: November 13, 2007

s/ Susan Richard Nelson

SUSAN RICHARD NELSON

United States Magistrate Judge

We the People

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Wednesday, August 15, 2007

Shoemaker Motion in Support of Sanctions

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Frank J. Steinhauser, III, et al., Civil No. 04-2632
JNE/SRN
Plaintiffs,
v. AFFIDAVIT OF
JOHN R. SHOEMAKER
City of St. Paul, et al., IN SUPPORT OF MOTION
FOR SANCTIONS
Defendants.
Sandra Harrilal, et al., Civil No. 05-461
JNE/SRN
Plaintiffs,
v.
Steve Magner, et al.,
Defendants.
Thomas J. Gallagher, et al., Civil No. 05-1348
JNE/SRN
Plaintiffs,
v.
Steve Magner, et al.,
Defendants.
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
John R. Shoemaker, being duly sworn upon oath, states and deposes as follows:
Case 0:04-cv-02632-JNE-SRN Document 114 Filed 08/06/2007 Page 1 of 32

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1. I am the attorney of record for the Plaintiffs in Frank J. Steinhauser, et al., v.
Magner, et al. and for Plaintiffs Sandra Harrilal and Steven R. Johnson in
Sandra Harrilal, et al. v. Magner, et al. I am submitting this Affidavit in
support of Plaintiffs’ joint Motion for Sanctions against Defendants in all three
of the consolidated cases.
2. On May 5, 2004, the Steinhauser Plaintiffs filed their Complaint against
Defendants; thereafter on May 28, 2004, Plaintiffs filed and served their
Corrected First Amended Complaint. On March 3, 2005, the Harrilal Plaintiffs
filed their similar Complaint against Defendants. On July 6, 2005, the
Gallagher Plaintiffs filed their Complaint against Defendants making similar
claims to the other Plaintiffs.
3. The Complaints of Plaintiffs set forth claims that they and other similarly
situated low-income landlords were selectively targeted by Defendants with
discriminatory code enforcement. See for example, Steinhauser Corrected First
Amended Complaint, pp. 4-6, parags. 11-21 (hereinafter referred to as
“Steinhauser Complaint,” (ECF #7).
4. The Steinhauser Complaint, in similar fashion to the Harrilal and Gallagher
Complaint, detailed claims that City officials were “targeting” Plaintiffs and
other similarly situated low-income landlords. Steinhauser Complaint, parags.
41-43, 67-70, 73, 82-85, 87, 114, 146, 166, 204 (Vues), 207 (Krahn), 217
(Mark), 218 (Johnson), 234 (Miller).
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5. Prior to filing of the Steinhauser Complaint, Steinhauser had provided oral and
written notice to Defendants of his claims of selective enforcement and
targeting of his properties while neighboring properties had significant
problems that the City was ignoring. This notice was provided by Steinhauser
to Dawkins at a meeting on October 8, 2002 between Dawkins, Steinhauser
and Sara Anderson (a Project Hope – H.U.D. funded housing advocate) – at
this meeting Steinhauser provided Dawkins with a five page list of properties.
See Exhibit 1, attached hereto, a true and correct copy of Dawkins’
Deposition Exhibit 13.
6. Sara Anderson confirmed in her March 1, 2007, deposition testimony that at
the meeting with Dawkins and Anderson, Steinhauser did in fact talk about
other properties around Steinhauser’s 910 6th property that had similar or worse
situations from a standpoint of code issues that Steinhauser’s property, and that
Steinhauser provided Dawkins with the list. See Exhibit 2, attached hereto, a
true and correct copy of the Deposition of Sara Anderson, p. 86-87.
7. The Steinhauser Complaint provided further notice of Plaintiffs’ claims that
Defendants were selectively targeting Plaintiffs’ rental properties at the
same time many other properties near by had significant problems and
code violations the City claimed it was concerned about but the City ignored
(Steinhauser Complaint, parags. 76, 114, 145, 146, 171, 176), and selective
enforcement “while adjacent rental and other properties with serious problems,
or properties with the same conditions” as Plaintiffs buildings were not
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targeted by Defendants for code enforcement. Steinhauser Complaint, parag.
204.
8. In Defendants’ August 5, 2004, Answer to paragraph 76 of the Steinhauser
Complaint, Defendants surprisingly stated that they, “admit that Steinhauser
showed Dawkins a list of other properties in the neighborhood of Steinhauser’s
910 6th St. E. property which Steinhauser claimed had obvious code violations”
and that they “admit that Steinhauser asked Dawkins why the City was
focusing on his properties when there were other nearby properties that had
problems”. Answer of Defendants to Steinhauser Complaint, parag. 60.
9. The Steinhauser Complaint placed at issue whether Defendants’ code
enforcement was being applied to single family properties across the City on a
“consistent basis”. Steinhauser Complaint, parag. 59.
10. In all versions of their Complaints, Plaintiffs have consistently claimed from
the initial filings that the St. Paul Public Housing Agency (“PHA”) owns and
manages low-income rental properties in the City of St. Paul that have similar
maintenance, repair and behavior problems to Plaintiffs properties. Steinhauser
Comp., parags. 28-32.
11. The Steinhauser Complaint, as an example of the nature of all of Plaintiffs’
claims from the start of this litigation, detailed the system of “inspections” of
the privately owned rental properties in the City, including, but not limited to,
exterior and interior inspections of single family and duplex properties by City
Inspectors, inspections of Section 8 rental properties by PHA, and inspections
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by housing advocates. Steinhauser Complaint, parags. 22, 23, 27 (coordinated
Police & Code inspections), 32 (PHA), 38, 43, 44, 47-48 (Fire Prevention
inspections), 54, 56, 57, 58, 74, 75, 79, 80, 86, 117-118 (PHA Section 8
inspections of private landlords), 138-139 (coordinated Police & Code
inspections), 164 (Project Hope), 173-174 (Police & Code), 180 (Project
Hope).
12. The Steinhauser Complaint claimed that Defendants illegal conduct included
intentionally claiming false code violations at Plaintiffs’ properties and
creating false statements in City inspection records in order to condemn those
properties. Steinhauser Complaint, parags. 96, 97, 107, 123, 128, 129, 149,
151, 153, 154, 170, 171, 176, 180, 181.
13. The Steinhauser Complaint also placed at issue whether Defendants targeting
of code enforcement had the effective of forcing Plaintiffs to sell their rental
properties. Steinhauser Complaint, parags. 105, 162 (Meysembourg), 143
(Brisson), 198 (Steinhauser), 233 (Johnson), 255 (Miller).
14. The Steinhauser Complaint also placed at issue all communications between
City officials, employees, agents, non-governmental organizations
(NGOs”) and other third parties, including neighbors of Plaintiffs’
properties, related to “code enforcement,” “selective targeting,” City
initiatives such as the “Problem Property 2000,” the “problem properties”
identification process, the “Problem Properties Unit,” forcing sale of lowincome
rental properties through police and code enforcement, gaining access
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to interiors of homes (parag. 43), how City actions were affecting affordable
housing, the condition of the City’s housing stock including single family and
duplex rental properties and many other issues raised in the Complaint.
Steinhauser Complaint, parags. 38 (CSP)
15. The Steinhauser Complaint also placed at issue the City’s “Problem Property
2000” initiative. Steinhauser Complaint, parags. 41-42.
16. The Steinhauser Plaintiffs served their Request for Production of Documents
on Defendants on November 5, 2004. Defendants responded to said requests
on 1/14/2005. See Exhibit 3, attached hereto, a true and correct copy of
Defendants’ Response to Plaintiffs’’ Request for Production of Documents
and Statements, Set One. Steinhauser Document Request No. 9 specifically
requested that Defendants produce all documents related in any way to NHPI
and its predecessor since 1994, including, but not limited to, “meetings,
minutes, notes, memos,” “records, records, reports, lists, files,” “computer
maintained information,” “email communications, and intra-office
communication documentation”. Defendants responded to said request by
stating, “NHPI has four general categories of files relating to single and twofamily
rental residential properties located in the City of St. Paul: (1) code
enforcement files generally retained three years; (2) vacant building files since
1998; (3) Truth-in-Sale of Housing files generally retained three years; and
(4) Rental Registration files generally retained three years” (emphasis added).
See p. 5, Exhibit 3.
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17. On information and belief, the NHPI’s Truth-In-Sale of Housing Office
claimed retention policy for TISH reports and files would have three prior
years of files plus the files from the current year. Therefore, at the time the
Steinhauser Complaint was filed and served in May 2004, the City would have
had TISH reports and files for the “current year” of 2004, and three previous
years, 2001, 2002 and 2003.
18. Steinhauser Plaintiffs Request No. 13 specifically requested that Defendants
produce all documents related to communications within the last ten (10)
years between a number of specified City agencies, other entities and/or
individuals related in any way to rental and non-rental housing, low-income
housing, housing, building, fire, health, life and/or safety matters. Code
enforcement operations, illegal searches and seizures, FORCE unit activities,
inspectors working with FORCE, police activity related to any of the
foregoing, St. Paul Public Housing (PHA) properties, or to state or federally
prohibited discrimination. See p. 6-7, Exhibit 3. Plaintiffs listed the City
agencies that there communications request related to as including NHPI, City
Council, legislative hearing officer, Office of Mayor, Police and Fire
Departments, LIEP, CSO, PED, and others, including PHA, neighborhood
district councils, and all other neighborhood groups and Defendants.
Defendants objected to this request but subsequently produced selected
“communication” type documents and eventually in 2007 agreed to produce
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“email” communications for the period of December 2005 and forward after
informing counsel for Plaintiffs that email and electronic
19. Steinhauser Plaintiffs Request No. 15 specifically requested that Defendants
produce all documents “related in any way to St. Paul Housing Agency (PHA)
properties including rental properties” for the past ten years. See p. 7-8,
Exhibit 3.
20. Steinhauser Plaintiffs Request No. 29 specifically requested that Defendants
produce all documents “related to the Problem Properties Task Force” and “a;;
documents related to ‘Problem Properties’ or Chronic Problem Properties’ as
defined by NHPI or its predecessor,” “including all chronic problem properties
or problem properties files of NHPI or its predecessor since 1992, all file
documentation related in any way to preparation of the 1995 and 2002 Reports
generated by the City Council,” “and all other reports on chronic problem
properties and problem properties provide to the City.” See pp. 12-13, Exhibit
3.
21. Steinhauser Plaintiffs Request No. 32 specifically requested that Defendants
produce all documents, including, but not limited to, correspondence, memos,
notes, reports, emails, meeting minutes, related in any way to
communications, complaints, meetings, reports, code deficiency notices,
condemnations or any other contact of any nature of Defendants, NHPI or its
predecessor(s), Fire Prevention or the Police Department with Community
Stabilization Project”. See p. 14, Exhibit 3 (emphasis added).
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22. Steinhauser Plaintiffs Request No. 40 specifically requested that Defendants
produce “all documents related to the Citizen Service Office’s initiative called
“Problem Properties 2000”. See p. 17, Exhibit 3 (emphasis added).
Defendants responded that “Following a reasonable inquiry, all documents
referring to ‘Problem Properties 2000’ are hereby produced. STP 0408-0410”.
See p. 18, and Exhibit 4, attached hereto, true and correct copies of STP 0408-
0410.
23. Steinhauser Plaintiffs Request No.75 specifically requested that Defendants
produce, “All documents relate in any way to how Defendants, NHPI, LIEP,
the City’s Office of Mayor, the City Council, the Department of Fire
Prevention, the legislative officer, Office of Citizen’s Services and the City
Police Department, create, use, delete, and archive computer information,
including emails, data compilations, computerized data, and other recorded
information, and all such documents of any kind.” See p. 28, Exhibit 3.
Defendants responded by producing STP 0737-0745, a true and correct copy
attached hereto as Exhibit 5.
24. On or about September 16, 2004, the Steinhauser Plaintiffs provided
Defendants with Plaintiffs Initial Disclosures. See Exhibit 6, attached hereto, a
true and correct copy of portions of Plaintiffs Initial Disclosures Pursuant to
Fed.R.Civ.P. 26 (A)(1)(A). Plaintiffs provided Defendants with notice of the
relevance of documentation including, NHPI documentation including
“correspondence, reports” and “problem properties documentation (p. 15, No.
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11), photographs of Plaintiffs’ properties, other landlords’ properties, and
photographs of properties not owned by Plaintiffs or property owners described
in the Complaint (p. 16, Nos.17-19), and “truth in sale housing inspection
reports” (p. 16, No. 20).
25. On or about September 21, 2004, Defendants served Plaintiffs with a Request
for Production of Documents, wherein Defendants specifically asked for all
“notice of deficiencies or violations of any local, state or national building, life,
safety, health or other code issued to or regarding any rental property owned”
by Plaintiffs since 1999 (Request No. 9), and “All Truth-In-Sale of Housing
documents for Plaintiffs’ properties” (Request No. 12). See Exhibit 7, attached
hereto, a true and correct copy of portions of Defendants’ Request For
Production of Documents and Statements to Plaintiffs, SET ONE.
26. On information and belief, on January 1, 2005, the City’s TISH office under
NHPI would have the current year of TISH reports (2005), three previous years
of TISH reports (2002, 2003, 2004) and the fourth year of TISH reports for
2001, that under the City’s normal document retention policy would be
destroyed. Affiant submits that after Defendants’ acknowledged in 2004 in
this litigation that TISH reports were relevant, Defendants destroyed relevant
evidence, the 2001 TISH reports for 5,000 – 6,000 single family and two
family properties across the city.
27. On February 28, 2005, Plaintiffs’ served their Expert Disclosures on
Defendants and provided notice to Defendants that the topics of Plaintiffs’
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expert included (page 2) “housing inspection programs and regulations,”
“problem properties, building maintenance,” “selective enforcement of housing
codes and targeting of rental properties,” and “related issues.” See Exhibit 8,
attached hereto, a true and correct copy of Plaintiffs’ Amended Rule
26(a)(2)(A) Expert Disclosures.
28. On or about April 15, 2005, Defendants served their expert disclosures on
Plaintiffs and noted that Dr. Thomas Musil was expected to testify regarding a
number of topics including, “real estate valuation methodology,” “market
conditions,” “impact and measurement of substandard and blighted properties
on community values, problem properties.” See Exhibit 9, attached hereto, a
true and correct copy of Defendants’ Rule 26(a)(2)(A) Expert Witness
Disclosure. Defendants’ disclosure also noted that a second expert, Merwyn
Larson, was expected to testify concerning topics such as “housing inspection
programs; housing, construction, and life safety code inspections; state and
local regulations; compliance and enforcement; building and property
maintenance”.
29. Following a series of motions by Defendants to Strike certain portions of the
Complaints of all Plaintiffs, Defendants served a Request for Production of
Documents on the Harrilal Plaintiffs dated January 12, 2006. See Exhibit 10,
attached hereto, a true and correct copy of Defendants’ Request For
Production of Documents and Statements to Plaintiff, Set One. Defendants
specifically asked for all documents related to the sale of each single family or
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two family rental property owned by Plaintiffs since 1999 (Request No. 4, p. 2)
and for all “notice of deficiencies or violations of any local, state or national
building, life, safety, health or other code issued to or regarding any rental
property owned” by Plaintiffs since 1999 (Request No. 9, p. 2). Additionally,
Defendants requested that Plaintiffs provide all documentation to support
Plaintiffs claims concerning PHA’s rental housing, code enforcement on said
properties, and behavior problems on said properties (Requests Nos. 12-14)
and all documents to support Plaintiffs’ claims of selective code enforcement
by Defendants while refusing to enforce codes against neighboring properties
and PHA properties with similar code violations and tenant behavior issues
(Request Nos. 15, 21 and 33).
30. On or about February 9, 2006, the Harrilal Plaintiffs served their Initial
Disclosures on Defendants and identified as relevant “correspondence” related
to non-plaintiff properties in the City (Request No. 1), NHPI documentation
(Request No. 11), photographs of properties in the City other than Plaintiffs’
properties (Request No. 21), and “truth in sale housing inspection reports”.
See Exhibit 11, attached hereto, a true and correct copy of Plaintiffs Initial
Disclosures Pursuant to Fed.R.Civ.P. 26 (A)(1)(A).
31. On information and belief, sometime after January 1, 2006, Defendants
destroyed relevant evidence, the 2002 TISH reports for 5,000 – 6,000 single
family and two family properties across the city.
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32. On or about March 23, 2006, Defendants served their supplemental
disclosures, combining these disclosures for all three cases herein. See
Exhibit 12, attached hereto, a true and correct copy of Defendants’
Supplemental Disclosures Pursuant to Fed.R.Civ.P. 26 (a)(1)(A). In these
supplemental disclosures, counsel for Defendants indicated that Brice Staeheli
may have discoverable information regarding code enforcement of properties
and condition of Plaintiff Steinhauser’s properties. On information and belief,
Brice Staeheli is a Truth-In-Sale of Housing evaluator licensed by the City of
St. Paul.
33. On or about May 1, 2006, Plaintiffs served their Expert Report of Don
Hedquist. See Exhibit 13, attached hereto, a true and correct copy of selected
pages of Don Hedquist’s Expert Report (pp. 1-7, 13, pages 1-2 Appendix).
Hedquist indicated (p. 1) that his opinions were based upon his review of
documents identified in Appendix A, including TISH reports, his inspection of
Plaintiffs’ 21 properties, visual inspection of properties of Plaintiffs’
neighbors, review of photographs of homes in the City owned by PHA, City
officials and employees and other property owners. Hedquist supported
Plaintiffs’ claims that Defendants applied a preferential code enforcement
standard to PHA homes and those of neighbors of Plaintiffs rental properties
and other low-income landlords.
34. On July 19, 2006, Defendants commenced the deposition of Steinhauser. See
Exhibit 14, attached hereto, a true and correct copy of selected pages of Frank
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Steinhauser’s deposition, July 19, 2006 (pp. 1-4, 225-228). Counsel for
Defendants presented a line of inquiry to Steinhauser concerning his TISH
reports (see p. 225-26). During the second day of Steinhauser’ deposition,
Defendants’ counsel continued the inquiry regarding the TISH reports. See
Exhibit 15, attached hereto, a true and correct copy of selected pages of Frank
Steinhauser’s deposition, July 25, 2006 (pp. 268-299).
35. On or about August 31, 2006, Defendants served their expert reports in the
Steinhauser case and provided a report from Dr. Thomas Musil. Exhibit 16,
attached hereto, a true and correct copy of selected pages of Expert Report of
Dr. Thomas A. Musil dated August 22, 2006 (pp. 16-17). In Table 5 to his
report (p.18), Dr. Musil detailed the City’s TISH reports on the Steinhauser
rental properties, including his calculation of the percentage of rated items that
were noted by evaluators to meet “minimum” standards, “below minimum”
and “hazardous” conditions on said properties. Dr. Musil noted (p. 18 that the
“collective rating system” in the TISH reports “provides an insightful
perspective on the maintenance practices and physical condition of Plaintiffs’
properties. He attached the TISH reports of Plaintiffs’ properties to his report.
36. On or about October 12, 2006, Plaintiffs served Defendants with Answers to
Interrogatories. See Exhibit 17, attached hereto, a true and correct copy of
Plaintiffs’ Answers to Interrogatories of Defendants (Set One). The
Harrilal Plaintiffs provided further notice to Defendants of the relevance of the
City’s “Problem Property 2000” initiative (p. 72, No. (5)), “City enforcement
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of codes on private low-income but not on PHA rental properties” (p. 73, Nos.
(6) and (10), and specifically claimed that certain third parties, including City
Council members, District Council personnel, unknown developers with
connections to City officials, racist neighbors, and others unknown at that time,
pressured Defendants to target Plaintiffs and tenants (p. 73, Answer to
Interrogatory No. 13). Plaintiffs Interrogatory Answers, page 74-75,
Interrogatory No. 15, provided further notice to Defendants that Plaintiff were
continuing to take the position that their claims were supported by
documentation concerning the physical condition of properties adjacent to
Plaintiffs properties, and properties across the City “owned by PHA, City
officials and employees, and family members and neighbors of same, including
their rental properties, businesses and residences of City District Councils, and
other property owners”. Plaintiffs noted that they had three years of
photographic evidence of these properties and provided Defendants with a
copy of these photographs. Plaintiffs’ Answer to Interrogatory No. 15 (p. 75)
further stated that, “Harrilal observed numerous properties adjacent to her 704
Lawson rental property that had code violations including broken windows,
exterior paint violations, deteriorated retaining wall structures, trash, etc. Yet
those neighboring properties were not cited by the inspectors. Johnson and
Vues observed similar deteriorated conditions on properties in the
neighborhoods of their targeted rental properties. Steinhauser, Meysembourg,
Brisson and other plaintiffs made similar observations concerning properties
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in their neighborhood that had egregious violations, yet were not cited while at
the same time the City inspectors repeatedly cited Plaintiffs and used
administrative, civil and criminal actions against them.”
37. On October 27, 2006, Defendants commenced the deposition of Harrilal. See
Exhibit 18, attached hereto, a true and correct copy of selected pages of
Sandra Harrilal’s deposition, October 27, 2006 (pp. 9-12, 57-60, 201-208).
Counsel for Defendants presented a line of inquiry to Harrilal concerning her
TISH reports (see p. 225-26).
38. On November 9, 2006, Defendants commenced the deposition of Johnson. See
Exhibit 19, attached hereto, a true and correct copy of selected pages of Steve
Johnson’s deposition, November 9, 2006 (pp. 1-4, 129-132). Counsel for
Defendants presented a line of inquiry to Harrilal concerning her TISH reports
(see pp. 129-130).
39. Defendants in Harrilal provided their expert report from Dr. Musil dated
November 29, 2006, wherein Dr. Musil again relied upon the City TISH
reports on Plaintiffs properties and specifically opined that, “The Truth in the
Sale of Housing report has strong relevance to address the contentions of Ms.
Harrilal that the City of St. Paul targeted her as a landlord and placed
unjustified code enforcement pressures on her properties. Exhibit 20, attached
hereto, a true and correct copy of selected pages of Expert Report of Dr.
Thomas A. Musil dated November 29, 2006 (pp. 2, 14-16).
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40. On or about November 29, 2006, Defendants also provided the expert report of
Jeremiah Anderson to support their defenses. Exhibit 21, attached hereto, a
true and correct copy of selected pages of Expert Report of Jeremiah
Anderson dated November 29, 2006 (pp. 1, 4, 6, and 14). Anderson’s report
discusses Plaintiffs’ claims of selective enforcement and targeting (p. 4) and
states that he reviewed the TISH report on Harrilal’s 704 Lawson rental
property.
41. On information and belief, sometime after January 1, 2007, Defendants
destroyed relevant evidence, the 2003 TISH reports for 5,000 – 6,000 single
family and two family properties across the city.
42. Attached as Exhibit 22 are true and correct copies of TISH reports from 2003-
2006 for Steinhauser’s former rental properties located at 1024 Euclid and 118
Litchfield, Harrilal’s former rental property at 704 Lawson, Meysembourg’s
former rental properties at 610 E. Jessamine and 93 W. Sycamore, and
Johnson’s former rental properties at 469 Whital, 941 Cypress, 483 Sherburne,
954 Carroll, 1066 Blair, and 540 Charles.
43. Attached as Exhibit 23 is a true and correct of selected pages (1-4, 37-40)
from the Deposition of Michael Kalis, an inspector with the City’s NHPI
department, wherein Mr. Kalis (pp. 38-39) provided Plaintiffs with further
information concerning the City’s TISH program.
44. Attached as Exhibit 24 is a true and correct of selected pages (204-207, 268-
279) from the Deposition of Dennis Senty, a vacant buildings inspector with
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the City’s NHPI department, wherein Mr. Senty (pp. 268-278) provided
Plaintiffs with further information concerning the City’s TISH program.
45. Following the end of the discovery cutoff on March 2, 2007, pursuant to the
Court’s Scheduling Order, Defendants served their responses to the Harrilal
Plaintiffs Requests for Production of Documents. See Exhibit 25, attached
hereto, a true and correct copy of Defendants’ Response to Plaintiffs
Harrilal and Johnson’s Request For Production of Documents. Defendants
responded to Requests Nos. 19-21 (p. 6), for all documents related to
“Cooperative Agreements between PHA and City and all other written
agreements between PHA and the City,” by stating that “All Cooperative
Agreements” in the City’s possession would be made available for inspection.
Defendants offered the same response to Request Nos. 20 and 21, wherein
Plaintiffs were seeking from the City all documents related to PHA’s payments
to the City in lieu of taxes and the City’s provision of police services to PHA’s
rental properties from 1999 to present (p. 6). At no time since that response
have the Defendants provided these documents or allowed inspection of same.
46. Prior to the end of discovery, the Harrilal Plaintiffs had specifically requested
that Defendants produce for inspection “All interdepartmental emails,
correspondence, memos, and documents of any kind related to code
enforcement issues between a number of City agencies including CSO, NHPI,
Mayor’s Office, City Council, Fire Prevention, and the PHA with these
agencies. See Exhibit 25, attached hereto, Request No. 27, p. 7-8.
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Defendants’ response after discovery ended including the following statement:
“Correspondence, including e-mails retained in hard copy, memos and other
documents, relating to code enforcement issues are filed by address in the
NHPI, LIEP and Fire Prevention files inspection files which have been
disclosed.” Exhibit 25, p. 8. Following Defendants’ service of the unsigned
Document Responses, Defendants’ counsel informed Plaintiffs’ counsel that
Defendants no had not retained any e-mails that Plaintiffs sought for the period
prior to December 2005, except for the e-mails that would be contained within
the code enforcement files.
47. Prior to the end of discovery, the Harrilal Plaintiffs had specifically requested
that Defendants produce for inspection all TISH files maintained by City for all
single family and duplex structures located in the City, including the TISH
disclosure reports, for the period of 2000 through present (See Exhibit 25,
Request No. 28, p. 8) and all TISH reports for PHA properties for the period of
2000 to present (Exhibit 25, Request No. 29, p. 9). Defendants responded that
the TISH reports were retained for three years and that the City received
approximately 6,000 reports each year and the report would be available for
inspection. Exhibit 25, pp. 8-9.
48. Affiant was present at the Offices of NHPI on March 16, 2007, for the first
day of inspection of the City’s TISH reports. Connie Sandberg, the assistant
director of TISH office under the direction of Defendant Dawkins between
2003 and December 2005, informed affiant, Matt Engel and Frank Steinhauser
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that the TISH reports for years previous to 2004 had been shredded and thus
were not available.
49. Prior to the end of discovery, the Harrilal Plaintiffs specifically requested that
Defendants identify all documents related in any to the meetings between City
officials and employees and PHA representatives. See Exhibit 26, attached
hereto, a true and correct copy of Defendants’ Answers to Plaintiff Harrilal
and Johnson’s Interrogatories, pp. 1, 9 and 27. Defendants have failed to
provide any documents related to admitted meeting between PHA officials and
NHPI inspectors during 2002 shortly after Dawkins was appointed by
Defendant Kelly to direct code enforcement for the City on single family and
two family structures.
50. Attached hereto as Exhibit 27, is a true and correct copy of selected pages of
Andy Dawkins’ deposition, January 3, 2007 (pp. 1-4, 145-176, 181-184, 273-
276, 285-292, 301-304, 349-352, and 361-364). Pages 146-147 (Steinhauser on
very first Problem Properties list – Lantry involved), page 149 (District
Council, Lantry, Dawkins and others touring Steinhauser rental property
neighborhood), pages 152-156, 160-162 (Meeting between NHPI, Dawkins,
inspectors and PHA officials/inspectors early in Dawkins term), 164-173 (PHA
issues), page 174 (PHA properties admitted to be in need of repairs), page 175
(“ACOP” policing program – provision of police services to PHA properties),
pages 182-184 (council members involvement with code enforcement), page
184 (Lantry wanted shorter timelines for owners repair), page 275 (Lantry
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“came and told me lots of things about how she wanted me to run the city”),
page 276 (“But there were untold visits to at her office or her in my office for
the next two months”), page 287 (Dawkins reported to Lantry), page 290
(councilmember involvement in code issues), page 304 (district council, nongovernmental
organizations working together with Council and Code Staff to
create target list for code enforcement), page 350-351 (Dawkins meeting with
Ramsey County Judge Cohen (retired) and Judge Mott on Dawkins code
proposals), page 361 (Judge Mott’s notes), page 352 (City proposal to PHA to
have PHA act as an administrator in City initiated tenant remedies actions
against private low-income landlords – PHA declined).
51. Attached hereto as Exhibit 28, is a true and correct copy of selected pages of
Andy Dawkins’ deposition, continued on January 11, 2007 (pp. 366-369, 534-
545, 586-593, 678-681). See pages 536-544 (City Council involvement in code
enforcement activities – contact with Dawkins), pages 586-593 (Lantry’s
involvement in code enforcement including with Steinhauser).
52. Attached hereto as Exhibit 29, is a true and correct copy of selected pages of
Steve Schiller’s deposition, November 21, 2006 (pp. 1-4, 13-16, 49-56, 97-
104, 125-128, 157-164, 245-248). See pages 98-102, 125, 160-161, 246
(emails used), TISH program, pages 13 and 49-55.
53. Attached hereto as Exhibit 30, is a true and correct copy of selected pages of
Dennis Senty’s deposition, December 22, 2006 (pp. 1-4, 33-40, 193-196).
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54. Attached hereto as Exhibit 31, is a true and correct copy of selected pages of
Joel Essling’s deposition, December 20, 2006 (pp. 1-4, 17-28, 69-84, 121-
124, 209-216). See pages 193-195 (emails) and TISH program, pages 33-40.
55. Attached hereto as Exhibit 32, is a true and correct copy of selected pages of
Pat Fish’s deposition, December 28, 2006 (pp. 1-4, 125-132, 145-148, 213-
244). See pages 147, 215-222 (emails), pages 128-130 (communications with
Council), pages 231 (emails from neighbors to Councilmember Lantry on 321
Bates), and page 232 (complaints of racial problem between neighbors and
caretaker).
56. Attached hereto as Exhibit 33, is a true and correct copy of selected pages of
James Seeger’s deposition, November 30, 2006 (pp.1-4, 41-44, 109-112, 117-
120, 157-160,169-192). See pages 41-42 (emails from CSO to LIEP), pages
111-112 (emails from City Council related to conditions at properties), pages
118, 120, 157 (Problem Property Task Force with Pat Fish of Fire Office –
emails, and pages 169-190 (the lack of City inspections on roof and furnace
repairs and replacements).
57. Attached hereto as Exhibit 34, is a true and correct copy of selected pages of
Joe Yannarelly’s deposition, December 21, 2006 (pp. 1-4, 29-36, 61-72, 133-
140, 145-148, 205-216). See pages 32, 34 (emails from district council), pages
63-69, 134-140, 145, 208-209, 213-216 (PP2000 initiative).
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58. Attached hereto as Exhibit 35, is a true and correct copy of selected pages of
Rich Singerhouse’s deposition, December 27, 2007 (pp. 1-4, 21-23, 53-56).
See pages 21 (emails), 55-56 (email from aide to Council on code complaints)
59. Attached hereto as Exhibit 36, is a true and correct copy of selected pages of
John Reardon’s deposition, December 7, 2007 (pp. 1-4, 21-32, 65-68, 93-96).
See pages 24 (Lantry or her staff contacting inspector), page 25 (contact from
Councilmember Thune and aide), pages 26-27 (neighborhood disputes with
unfounded code complaints and racially motivated), page 27-28 (contact from
Mayor’s office), page 67 (email from Mayor’s office), page 68 (Dawkins
would email), 94 (emails).
60. Attached hereto as Exhibit 37, is a true and correct copy of selected pages of
Richard Lippert’s deposition, Vol. I, December 19, 2007 (pp. 1-4, 61-64, 69-
76, and Deposition Exhibit 3 (STP 0408), Deposition Exhibit 4 (STP 0409-
0410) and Deposition Exhibit 5 (04007, City Council Research Report,
Chronic Problem Properties in Saint Paul: Case Study Lessons” – 16 selected
pages from the Report.
61. Affiant reviewed the NHPI code enforcement files produced by Defendants in
the Steinhauser and Harrilal cases for all emails contained in the NHPI files of
selected properties owned by Plaintiffs. Affiant has attached hereto as Exhibit
38, true and correct copies of all of the emails contained within those NHPI
files. Affiants review consisted of: A. Steinhauser targeted properties that
were on the NHPI “Problem Properties Lists” in 2002 and 2003: (1) 118
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Litchfield, Bates STP 1199-1297 – one email, STP 1223; (2) 719 Sherburne,
Bates 1785-1832 – one email, STP 1803; (3) 910 6th St., Bates STP 1562-1634
– one mail, STP 1581 and one letter STP 1613-14; and Bates STP 1951-1960 –
a memo, STP 1957, from City Council, name redacted, to Dawkins July 15,
2002 re 910 6th and other properties in Dayton’s Bluff area – talks about all the
emails from constituents; (4) 953 Wilson, Bates 1377-1424 – no emails; (5)
1024 Euclid, Bates 1752-1784 – no emails. B. Meysembourg’s targeted
property at 970 Euclid, NHPI file Bates 1298-1376 – no emails except for an
interdepartmental memo from Claims Manager to PED and Dawkins dated
November 5, 2003 regarding the City’s notice of Meysembourg’s claim.
However, Bats 0030026, a Complaint Report for 970 Euclid prepared by the
City, Meysembourg Deposition Exhibit 3, refers to multiple emails on January
6, 2003, to CSO, Mayor’s Office, and all City Council Members. C. Brisson’s
targeted property at 297 Burgess, Bates 0746-1159, 1160-1198 – one email,
STP 00814, from David Tank to Lisa Martin regarding the roof on 297
Burgess. Please note that there is only one email in the NHPI file referenced
herein yet STP 0012, 0014, and 0015 code enforcement documents for 297
Burgess make repeated references to “email” being sent on five (5) separate
dates to three (3) different NHPI inspectors. D. Harrilal’s targeted property
at 704 Lawson on the NHPI Problem Properties List, Bates were not attached
by Defendants even though repeatedly requested – one email from CSO to Lisa
Martin of September 4, 2003 – one page. E. Johnson’s targeted properties:
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(1) 540 Charles, Bates STP 4231-4377 – 2 emails, STP 4246 dated 5/5/2005 –
this email from Racquel Naylor to John Betz refers to “Below is my original email”
but fails to contain that claimed original email; the second email, STP
4310, from CSO to Lisa Martin is dated 7/12/2004; (2) 941 Cypress, Bates
4378-4509 – 2 emails, STP 4443, dated 3/29/2002 from CSO to Jim Prill, and
STP 4450, dated 5/8/2002, from CSO to Jim Prill – both are complaints made
against the property; (3) 664-666 Thomas, Bates 5989-6005; 6006-6034 – one
email, STP 5999, dated 8/27/04 from Louise Langberg to Dawkins and Pat
McGinn regarding the wrong address in the NHPI computer; (4) 954 Carroll,
Bates STP 4187-4230 – no emails; (5) 606 Edmund, Bates 4614-4738 – no
emails; (6) 67 Jessamine, Bates 5149-5239 – no emails; (7) 405 Jessamine,
Bates 5240-5279 –no emails; (8) 390 Sherburne, Bates 5638-5766 – no
emails; (9) 469 Whitall, Bates 6035-6350 – no emails; (10) 1066 Blair –
affiant did not review this file for emails.
62. Attached hereto as Exhibit 39, is a true and correct copy of selected pages
from three envelopes received by Affiant through the U.S. Mail from an
anonymous source Affiant believes is an employee working for the Defendant
City in a code enforcement role. These envelopes were all received after the
close of discovery March 2, 2007. Affiant forwarded a copy of these
envelopes and contents to Louise Seeba, counsel for Defendants.
63. The first envelope received by Affiant is postmarked April 3, 2007. One
document from that envelope, appears to be a memo from Inspector Harold
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Robinson and Officer Mark Wiegel to Code Inspectors dated 10/25/2002,
regarding Potential Problem Properties, wherein Robinson and Wiegel state,
“Would any inspector with open files dealing with properties owned by …
Steinhauser please pass the file to either officer Wiegel or Koehnen who will
turn it over to Lisa Martin as a potential problem property. Lisa will finish
work dealing with the files. Also, in the future if you get a file in reference to
any property owned by these individuals, pass the file on to Lisa.” This memo
was copied to Dawkins. This document was not produced to Plaintiffs by
Defendants. Exhibit 39.
64. A second envelope received by Affiant is postmarked May 25, 2007. Exhibit
39. This envelope contained a four page document titled, “PROGRESS
REPORT ON PP 2000 JANUARY TO SEPTEMBER, 2000” with the typed
names of “HAWKINS/YANNARELLY/ESSLING” and the date, “9/29/2000”
on the fourth page. Exhibit 39. Affiant had inquired of Richard Lippert at his
December 19, 2006, deposition about the PP2000 program and whether the
Progress Report referred to in his memo to Inspectors Essling, Hawkins and
Yannarelly dated 10/11/00, STP 0408, Exhibit 4 hereto, was still in existence.
See pages 6263, 71-74, Lippert deposition, Exhibit 37, hereto. Lippert claimed
he did not recall that report and that he would probably not expect that report
to still be available – that he did not know where the report could be. Lippert
Deposition, pp. 73-74. Lippert did admit that he has email correspondence
with other inspectors “sometimes” and that “there were occasions” where he
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emailed from the Police Force unit where he was assigned to NHPI. Lippert
deposition p. 69. The Steinhauser Complaint had included significant
allegations about the PP2000 program. See Paragraph No. 15 above. Plaintiffs
submit that the PP2000 program was successful in handling the legitimate
concerns of the City, neighbors, tenants and landlords and that Defendants
decided to abandon PP2000 because the program did not force landlords such
as Plaintiffs from the low-income rental business in the City and protected
class tenants from the City as demanded of Defendants by certain third parties
in the City.
65. Additional documents were contained within the second envelope received by
Affiant, postmarked May 25, 2007. Exhibit 39. This envelope also contained
a NHPI “Intra-Office Memorandum” dated April 11, 2003 from Andy
Dawkins to “All Staff” regarding calendar planning. The Memo states that on
April 30, 2003 at 9:30 a, to 10:30 am there would be a training session: “Next
training date: PHA Inspectors will join us here so we can find out what
geographic areas they are assigned to, what standards they inspect to, when
should we share information, etc.” This document was not disclosed by
Defendants in discovery.
66. The second envelope received by Affiant, postmarked May 25, 2007, also
contained a Memorandum of City of Saint Paul from Andy Dawkins to “All
Inspectors and Supervisors” dated July 1, 2003, regarding “NEW POLICY
EFFECTIVE IMMEDIATELY”. Exhibit 39. This memo discusses the issue of
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how an inspector could legally enter a dwelling without consent of the
occupants or an administrative search warrant – when asked by the police to
enter.
67. The second envelope received by Affiant, postmarked May 25, 2007,
Exhibit 39, also contained a Memorandum of City of Saint Paul, dated
9/21/05 from Andy Dawkins to “Inspectors” wherein Dawkins admits that for
seven of the complaints from a sweep he entered them as complaints made by
him. Exhibit 39. Another document contained in this second envelope not
previously produced by Defendants is a Memorandum of City of Saint Paul,
dated June 24, 2003 from Andy Dawkins to NHPI Department regarding
“Condemnation Notice” and refers to working together with Caty Royce of
Community Stabilization Project just as Plaintiffs have claimed throughout this
litigation.
68. A third envelope received by Affiant, postmarked May 31, 2007. Exhibit 39.
Three documents contained in this envelope relate direct to the PP2000
initiative that has been the subject of Plaintiffs’ Complaints, discovery requests
and responses and depositions. See Exhibit 39, for the three documents, one
page in length each, with headings, “PP2000” and containing a list of problem
property owners. Each of these three documents specifically references
Plaintiffs Steinhauser and Vue.
69. Plaintiffs took the deposition of Jeffrey Hawkins on February 15, 2007 in order
to inquire about the PP2000 initiative. See Exhibit 40, attached hereto, a true
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and correct copy of the Jeffrey Hawkins’ deposition (pp. 1-4, 9-115. By that
time, Defendants had only produced two documents, STP 0408 and 409-410,
related to PP2000. Hawkins could not recall the number of landlord placed in
the PP2000 initiative. Hawkins deposition, pp. 15-16. Hawkins was asked
about his communications with Lippert, the head of the PP2000 initiative, the
Lippert Memo to the three PP2000 inspectors, STP 0408. See Hawkins
deposition, pp. 15-17, 25-26, 30. The Progress Report provided to Affiant
anonymously would have been valuable in deposing both Hawkins, Lippert,
Essling and Yannarelly, the inspectors who worked with “problem property”
landlords during the period just prior to Defendants Kelly and Dawkins new
heavy-handed approach to property owners. See Essling Deposition, Exhibit
31 hereto, pp. 211-214 (PP2000 topics). Affiant asked Essling whether any
reports were prepared as part of PP2000, to which Essling replied that he could
not remember. Essling, p. 213. Essling did testify that the City Council “put
out a huge report after that which essentially said we did a bad job and things
have to change.” P. 213. When asked whether he thought the program was a
success, Essling testified that he couldn’t tell Affiant. P. 213. He also could
not recall how many landlords were involved in the PP2000 initiative. P. 213.
70. Inspector Essling testified that he did receive emails from citizens,
neighborhood groups, district councils and the city council about code
enforcement issues. See Exhibit 31, Essling deposition, pp. 20-21. Essling
also testified concerning the TISH program operated under NHPI. Essling
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deposition, pp. 69-77. Finally, Essling testified that he had experienced
repeated non-compliance with code enforcement orders given to PHA on a
property. Essling deposition, pp. 122-124.
71. The third envelope anonymously forwarded to Affiant also contained other
relevant documents including a Memorandum of City of Saint Paul from Andy
[Dawkins] to “All Staff” dated November 3, 2004, with the Subject: “Any
examples of unfair or biased practices?” Exhibit 39. Dawkins’ memo
informed the staff that the Mayor’s office has asked each department to think
of any examples where city government might be susceptible of racism or
other unfair practices, and what we might do about that. Dawkins stated that
he had come up with three examples and wanted to hear from the staff.
Dawkins acknowledges that the complaint based system of code enforcement
is susceptible of being manipulated by one group against another, but doing
pro-active sweeps means everybody gets inspected. A third example by
Dawkins stated: “Perhaps a disproportionate number of folks getting EC bills
are people of color; but if this is so, then maybe it’s because a
disproportionate number of families living in poverty are people of color. And,
if this is so, then maybe we should seriously move forward on hiring somebody
to do what Tait and Kathy did and help this group find the resource to get the
job done.” Interestingly, another Memorandum of the City of Saint Paul
document from Dawkins dated November 13, 2003 on the subject of Excessive
Consumption Development and Training to all staff stated that, “I estimate the
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new ordinance will bring in half a million dollars or more, and the Mayor has
basically said it’s ours to spend – which is good, because … the new rental
registration ordinance will likely increase the number of interior inspections
we do by a substantial amount and either we’re going to get a lot of overtime,
or were going to have to do some new hires.” Dawkins further stated, “Also,
remember January 1, is the dated we start writing-up every property the way
the Mayor told Harold and me and Tom on the “Revoir Tour”. This will also
slow us down some, but it is the way to build our base so we do bring-in the
half a million on re-inspects.” Exhibit 39.
72. The third envelope contains another Memorandum of City of Saint Paul from
Andy [Dawkins] to “All NHPI Staff” dated September 9, 2005, concerning a
complaints being made on properties owned by Mayor Kelly’s supporters.
Exhibit 39. Dawkins complains that the complaints were “mostly frivolous or
unfounded and inspectors should refer the complaints to him and he would
then assign the inspectors to follow-up.
73. The third envelope contains four pages containing email addresses of City
officials, including Dawkins, Lantry, Marcia Moermond, employees and third
parties including neighborhood groups. Exhibit 39.
74. Attached hereto as Exhibit 41, is a true and correct copy of selected pages
from minutes of the City’s Property Enforcement Task Force, Bates STP 6519-
6525, and 6555. These minutes refer to communication between certain
selected members via email. STP 6519, 6523 (Dawkins’ comments – Fish said
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she sent an email to “target group” to monitor a problem property), STP 6524
(“Dawkins said he received an email from the crime prevention coordinator
from the Ramsey Hill area), and STP 6555, “Fish passed around a roster for
members to fill in their e-mail addresses … A City e-mail group including
some outside agencies will be created. The concept is to relay information you
have by e-mail instead of waiting for the next meeting.”
75. Attached hereto as Exhibit 42 is a true and correct copy of emails during 2004
to and/or from City Council officials and council staff and neighbors related to
attempts to shut down the low-income rental property located at 321 Bates
Ave.. Plaintiffs’ counsel discovered the email marked STP 019888-889 and
the email marked STP 019890-892 during Affiant search of legislative hearing
files of the City Council. Affiant reviewed the Fire Prevention code
enforcement file scanned by Attorney Engel at City offices earlier this year.
Affiant has determined from this review that the two emails marked STP
019888-889 and STP 019890-892 are not contained within the code
enforcement file for 321 Bates maintained by the Fire Prevention Office.
FURTHER YOUR AFFIANT SAYTH NOT.
Dated: 7/6/07 s/ John R. Shoemaker__
John R. Shoemaker
Subscribed and sworn to before me
this ____ day of August, 2007.
_______________________________
Notary Public
Under Seal

Attorney Matthew Engel Motion in support of sanctions

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Frank J. Steinhauser, III, et al., Civil No. 04-2632
JNE/SRN
Plaintiffs,
v. AFFIDAVIT OF
MATTHEW ENGEL
City of St. Paul, et al., IN SUPPORT OF MOTION
FOR SANCTIONS
Defendants.
Sandra Harrilal, et al., Civil No. 05-461
JNE/SRN
Plaintiffs,
v.
Steve Magner, et al.,
Defendants.
Thomas J. Gallagher, et al., Civil No. 05-1348
JNE/SRN
Plaintiffs,
v.
Steve Magner, et al.,
Defendants.
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
Matthew A. Engel, being duly sworn upon oath, states and deposes as follows:
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1. I am an attorney licensed to practice law in the State of Minnesota and
admitted to practice in District Court. I am the attorney of record for the
Plaintiffs in Thomas J. Gallagher, et. al., v. Magner, et. al. This affidavit is
submitted on behalf of all of the Plaintiffs in the above captioned matters in
support of Plaintiffs’ Motion for Sanctions.
2. On March 12, 2007, pursuant to Fed. R. Civ. P. 37 (a)(2)(A), attorney John R.
Shoemaker, counsel for the Steinhauser, et al. and Harrilal, et al. Plaintiffs, and
I met and conferred in good faith with Louise Toscano Seeba, attorney for
Defendants in the above entitled matters, in an attempt to resolve the discovery
dispute regarding Defendants’ failure to respond to Plaintiffs’ requests for
production of documents and interrogatories within the time permitted by the
Rules.
3. Attached hereto as Exhibit “A” are true and correct copies of the Plaintifffs’
Interrogatories to Defendants and Plaintiffs’ Request for Production of
Documents. Requests were made for emails. See Document Request No. 90
of Exhibit “A” at page 18. Requests were made for TISH reports. See
Document Request No. 91 of Exhibit “A” at page 18. Requests were made for
Problem Property documents. See Interrogatory No.35 of Exhibit “A” at
page 8. See Document Request No. 13 and 34 of Exhibit “A” at pages 5 and 9.
Requests were made for PHA documents. See Interrogatory Nos.9-22 of
Exhibit “A” at pages 3-6. See Document Request Nos. 20-24 of Exhibit “A” at
pages 6-8.
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4. Thereafter, I submitted a letter to Defendants’ counsel confirming the
agreements of counsel for the continued discovery efforts. Attached hereto as
Exhibit “B” is a true and correct copy of the March 13, 2007, correspondence I
sent to Ms. Seeba.
5. During the next 12 weeks, between March 16, 2007 and June 11, 2007, I
scheduled and appeared at various City of St. Paul offices to review and scan
documents. There were approximately 20 document reviews on or about the
following dates: TISH reports on the following dates: March 16, 21, 22, 26,
and 27; April 3, 5, 13, and 17; Fire Prevention documents on April 19;
Employee Mileage Reports and Police Call Reports on April 23; NHPI
documents on April 27; LIEP documents on May 7; Moermond research files
on May 8; Legislative Hearing documents on May 23 and 24; Problem
property lists, Sweep reports, and other NHPI documents on May 31; Fire
Prevention documents on June 4; LIEP files on June 11 and 18, 2007.
6. During the document review session on April 23, 2007, at the offices of the
City Attorney, Defendants’ counsel Ms. Seeba stated to me that her IT people
would like to work on getting the emails, but that they only have emails
available back to December of 2005. During several of these meet and confer
meetings with Defendant’s counsel, I was informed that all emails prior to
December of 2005 had been destroyed and were no longer available.
7. I sent a letter to Defendant’s counsel Ms. Seeba dated May 1, 2007, confirming
the destruction of all emails prior to December, 2005. Ms. Seeba responded
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with a letter dated May 3, 2007, confirming that no emails prior to December
of 2005 were available, but certain emails were available after December,
2005. Attached hereto as Exhibit “C” and “Exhibit D” are true and correct
copies of the May 1, 2007, and May 3, 2007, correspondence.
8. During the document review sessions at the St. Paul City Attorney’s office, on
no less than five occasions I sat down to meet and confer with Defendant’s
counsel, Louise Seeba, and discussed the status, progress, and technicalities of
the production of emails by the defendants.
9. Defendants’ counsel stated that she needed a list of names of the individuals of
whom Plaintiffs would like emails produced. I requested a list of all of the
employees for each of the departments listed in the discovery request.
Defendants’ counsel agreed to produce the lists. On June 4, 2007, counsel
agreed that defendants would restore available emails of certain city
employees. Plaintiffs’ and Defendants’ counsel exchanged letters on June 6,
2007. Defendants’ letter dated June 6, 2007, contained a list with the city
employees to restore available emails. Plaintiffs’ counsel responded to
defendants’ counsel with additional City employee names. Attached hereto as
Exhibit “E,” “Exhibit F,” and “Exhibit G” are true and correct copies of the
June 6, 2007, and June 7, 2007, correspondence and employee lists of city
employees whose emails were to be restored back to December of 2005.
10. During the document review session of Truth In Sale of Housing (TISH)
Reports on March 16, 2007, at the offices of Neighborhood Housing and
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Property Improvement, 1600 White Bear Avenue, City of St. Paul employee
Connie Sandberg stated to me, John Shoemaker and Frank Steinhauser that
copies of TISH reports are only maintained for three (3) years, and that all
TISH reports prior to 2004 had been destroyed.
11. TISH reports are relevant to the Plaintiffs claims as they show the condition of
the interior of properties within the City of St. Paul. Destruction of TISH
reports is prejudicial to Plaintiffs’ in that these reports will show the conditions
of similar properties, including those owned by PHA or those owned by city
officials. Plaintiffs in the Gallagher, et al. case, as well as the Steinhauser, et
al. and Harrilal, et al. cases, have claims that the Plaintiffs' properties and those
of other targeted rental property owners are not afforded PHA's competitive
advantage of deferral of capital improvements but instead suffer immediate and
long term adverse consequences from Defendants' discriminatory and illegal
code enforcement actions and racketeering activity against the privately owned
rental properties and rental businesses who are providing housing services to
Section 8 and low income “protected class” members. TISH reports would
show that PHA's rental housing stock has similar health, safety, fire and
housing code issues as the rental properties that are owned by Plaintiffs and
other private landlords renting to “protected class” members including those
property owners providing critical housing under the Section 8 program.
However, PHA’s rental housing stock is subjected to City code enforcement
but to a minimal degree compared to City code enforcement applied to
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Plaintiffs and similarly situated private rental property owners. PHA's rental
housing stock is not subjected by Defendants to condemnations, orders to
vacate, demands for code compliance inspections, fines or rental registration
provisions, including rental revocation actions. Additionally, PHA’s rental
housing stock is rarely, if ever, targeted with any other code enforcement
actions by Defendants. Conversely, Plaintiffs and other private landlords
renting to “protected class” members are subjected to these adverse code
enforcement actions by Defendants. TISH reports of similarly situated
properties is relevant and likely to show that Plaintiffs’ properties were
illegally targeted – in violation of and in support of Plaintiffs’ claims,
including claims under RICO, Fair Housing, Civil Rights, Antitrust, Abuse of
Process, and Tortious Interference with Contract and Business Expectancy.
12. Attached hereto as Exhibit “H” are 2004 TISH reports of PHA properties
which were obtained from the remaining TISH reports that were not destroyed.
Exhibit “H” contains four (4) TISH reports from 2004 for PHA properties.
13. Attached hereto as Exhibit “I” are 2007 TISH reports of PHA properties which
were obtained from the remaining TISH reports that were not destroyed.
Exhibit “I” contains seventeen (17) TISH reports from 2007 for PHA
properties.
14. Attached hereto as Exhibit “J” are TISH reports of city official and employee
properties which were obtained from the remaining TISH reports that were not
destroyed.
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15. Attached hereto as Exhibit “K” are TISH reports of properties located in the
City of St. Paul which are located in the neighborhood surrounding a Plaintiff’s
property which was targeted at 910 6th Street, St. Paul. These thirteen (13)
TISH reports were obtained from the remaining TISH reports that were not
destroyed. They were taken from 6th Street, which runs east/west; 5th Street,
which is one (1) block south; and Margaret, which is one (1) block north.
16. Attached hereto as Exhibit “L” are TISH reports of properties located in the
City of St. Paul which are located in the neighborhood surrounding a Plaintiff’s
property which was targeted at 719 Sherburne Street, St. Paul. These
seventeen (17) TISH reports were obtained from the remaining TISH reports
that were not destroyed. They were taken from Sherburne Street, which runs
east/west; Charles Street, which is one (1) block north; and Edmund Street,
which is two (2) blocks north.
17. Attached hereto as Exhibit “M” are TISH reports of properties located in the
City of St. Paul which are located in the neighborhood surrounding a Plaintiff’s
property which was targeted at 704 East Lawson, St. Paul. These twenty-five
(25) TISH reports were obtained from the remaining TISH reports that were
not destroyed. They were taken from Lawson Street, which runs east/west;
Cook Street, which is one (1) block north; Jenks Street, which is one (1) block
south; and Case Street, which is two (2) blocks south of Lawson.
18. Attached hereto as Exhibit “N” are TISH reports of properties located in the
City of St. Paul which are located in the neighborhood surrounding a Plaintiff’s
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property which was targeted at 469 Whitall, St. Paul. These twelve (12) TISH
reports were obtained from the remaining TISH reports that were not
destroyed. They were taken from Whitall Street, which runs east/west; Burr
Street, which is a north/south street that dead ends at Whitall; Case Street,
which is two (2) blocks north; and Jenks Street, which is three (3) blocks north
of Whitall.
19. Attached hereto as Exhibit “O” are TISH reports of properties located in the
City of St. Paul which are located in the neighborhood surrounding a Plaintiff’s
property which was targeted at 297 Burgess, St. Paul. These fourteen (14)
TISH reports were obtained from the remaining TISH reports that were not
destroyed. They were taken from Burgess Street, which runs east/west;
Stinson Street, which is one (1) block north; and Front Street, which is two (2)
blocks north of Burgess.
20. Attached hereto as Exhibit “P” are TISH reports of properties located in the
City of St. Paul which are located in the neighborhood surrounding a Plaintiff’s
property which was targeted at 118 Litchfield, St. Paul. These sixteen (16)
TISH reports were obtained from the remaining TISH reports that were not
destroyed. They were taken from Litchfield Street, which runs east/west; Front
Street, which is one (1) block north; Park Street, which is one (1) block east;
Manitoba Street, which is two (2) blocks south; Winnipeg Street, which is
three (3) blocks south; and Sycamore Street, which is four (4) blocks south of
Litchfield.
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21. Attached hereto as Exhibit “Q” are TISH reports of properties located in the
City of St. Paul which are located in the neighborhood surrounding a Plaintiff’s
properties which were targeted at 953 Wilson, 970 Euclid and 1024 Euclid, St.
Paul. These twenty-three (23) TISH reports were obtained from the remaining
TISH reports that were not destroyed. They were taken from Euclid Street,
which runs east/west; Conway Street, which is one (1) block north; Wilson
Street, which is two (2) blocks south; and Wakefield Street, which is three (3)
blocks south of Euclid.
22. Attached hereto as Exhibit “R” are TISH reports of properties located in the
City of St. Paul which are located in the neighborhood surrounding a Plaintiff’s
properties which were targeted at 606 Edmund and 390 Sherburne, St. Paul.
These twenty-five (25) TISH reports were obtained from the remaining TISH
reports that were not destroyed. They were taken from Sherburne Street,
which runs east/west; Charles Street, which is one (1) block north; and
Edmund Street, which is two (2) blocks north of Sherburne.
23. Emails, electronic communications and electronically stored documents are
relevant to the Plaintiffs claims as they may show selective targeting of
Plaintiffs or others by code enforcement officers in the City of St. Paul, and, as
such, the destruction of emails is prejudicial to Plaintiffs. Those emails may
have shown Defendants knew and intended that their selectively aggressive
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code enforcement operations against Plaintiffs, other property owners, and
their tenants, would have a discriminatory impact upon members of the
"protected class" living within the City and upon the private property owners
providing housing to said “protected class.” Defendant Dawkins prepared a
memo to code enforcement inspectors regarding the discriminatory impact of
code enforcement. This evidence was produced anonymously in one of the
five (5) anonymous packets received by John Shoemaker. See Exhibit “39” of
Affidavit of John Shoemaker. It is reasonably likely that this type of evidence
would have been contained in the emails from 2002-2005, the time period in
which Plaintiffs claim illegal code enforcement. However, all emails during
Defendant Dawkins’ employment have been destroyed, and this is prejudicial
to the Plaintiffs.
24. Defendants were put on notice of the Plaintiffs’ claims with detailed facts,
circumstances and issues surrounding such claims. These detailed claims
provided Defendants with sufficient notice to place a litigation hold and not to
destroy relevant evidence. Attached hereto as Exhibit “S” is a true and correct
copy of the July 5, 2005, Notice of Claim Letter. The Complaint, First
Amended Complaint and Second Amended Complaint can be found at Case
No. 05-1348, ECF Doc. Nos. 1-1, 17, and 59, and were filed on July 6, 2005,
December 21, 2005, and May 4, 2007, respectively.
25. Attached hereto as Exhibit “T” are true and correct copies of Defendants’
Answers to Plaintiffs’ Interrogatories and Defendants’ Responses to Plaintiffs’
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Demand for Production of Documents. These documents will show the
Defendants’ responses to the requests discussed in paragraph 3 of this affidavit.
26. Attached hereto as Exhibit “U” are true and correct copies of all emails found
in the documents produced by Defendants with respect to all of the Plaintiffs in
the Gallagher, et al. case. The search for emails included the NHPI, LIEP and
Fire Prevention files for thirty-four (34) properties, equaling 2,230 pages. The
review for emails produced only seven (7) emails, four (4) of which related to
a singe correspondence between Thomas Gallagher and Mike Cassidy with
respect to a property located at 643 Watson.
FURTHER YOUR AFFIANT SAYTH NOT.
Dated: 8/6/07 s/ Matthew A. Engel__
Matthew A. Engel
Subscribed and sworn to before me
this 6th day of August, 2007.
s/ Erik L. Vakula
Notary Public
Under Seal

JOINT MEMORANDUM OF LAW IN SUPPORT OF MOTION FOR SANCTIONS

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Frank J. Steinhauser, III, et. al., Civil No. 04-2632
JNE/SRN
Plaintiffs,
v.
City of St. Paul, et. al.,
Defendants.
Sandra Harrilal, et. al., Civil No. 05-461
JNE/SRN
Plaintiffs,
v.
Steve Magner, et. al.,
Defendants.
Thomas J. Gallagher, et. al., Civil No. 05-1348
JNE/SRN
Plaintiffs,
v.
Steve Magner, et. al.,
Defendants.
Plaintiffs in Frank J. Steinhauser, III, et al., Plaintiffs Sandra Harrilal and Steven R. Johnson in Sandra Harrilal, et al., and Plaintiffs in Thomas J. Gallagher, et al., through their
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undersigned counsel, submit this Joint Memorandum of Law in support of Plaintiffs’ Motion for Sanctions.
INTRODUCTION
Plaintiffs’ counsel learned on March 16, 2007, and April 23, 2007, from counsel for Defendants that certain relevant evidence was destroyed by Defendant’s during the course of this litigation (See Engel Aff., para’s. 6 and 10), including the City’s Truth In Sale of Housing reports for 2001, 2002 and 2003, and all emails and electronic communications between City officials, employees, non-government organizations, district councils, neighborhood groups, public housing agency and other entities and individuals for all time periods prior to December, 2005. Moreover, Defendants have failed to produce any documentation of the City’s “Cooperative agreements,” “police service agreements,” and other agreements it has with the City’s Public Housing Agency (“PHA”) even though Plaintiffs have made proper and repeated requests for this evidence relevant to Plaintiffs’ claims. In addition, relevant City documents that were not produced by the Defendants were provided to Plaintiffs’ counsel after the close of discovery from an anonymous source, long after Plaintiffs could utilize these documents in depositions of inspectors.
Because of Defendant’s spoliation of evidence during the course of this litigation, and due to the further failures by Defendants to produce numerous other relevant City documents, Plaintiffs are request that the Court issue its order sanctioning Defendants.
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On March 12, 2007, pursuant to Fed. R. Civ. P. 37 (a)(2)(A), counsel for Plaintiffs met and conferred in good faith with the attorney for Defendants in an attempt to resolve the discovery disputes regarding Defendants’ failure to respond to Plaintiffs’ requests for production of documents and interrogatories within the time permitted by the Rules. Engel Aff. at para. 2.
Plaintifffs’ in all three cases (Steinhauser, et al, Harrilal, et al. and Gallagher, et al.) submitted Interrogatories and Requests for Production of Documents to Defendants. Requests were made for emails. Requests were made for TISH reports. Requests were made for Problem Property 2000 documents. Requests were made for PHA documents. Engel Aff. at para. 3. See Also John R. Shoemaker Affidavit, paras. 16, 18, 19, 20, 21, 22, 45, 46, 47, 49.
Attorney Engel submitted a letter to Defendants’ counsel confirming the agreements of counsel for the continued discovery efforts. Engel Aff. at para. 4.
During the next 12 weeks, between March 16, 2007 and June 11, 2007, attorney Engel scheduled and appeared at various City of St. Paul offices to review and scan documents. There were approximately 20 document reviews on or about the following dates: TISH reports on the following dates: March 16, 21, 22, 26, and 27; April 3, 5, 13, and 17; Fire Prevention documents on April 19; Employee Mileage Reports and Police Call Reports on April 23; NHPI documents on April 27; LIEP documents on May 7; Moermond research files on May 8; Legislative Hearing documents on May 23 and 24; Problem property lists, Sweep reports,
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and other NHPI documents on May 31; Fire Prevention documents on June 4; LIEP files on June 11 and 18, 2007. Engel Aff. at para. 4.
During the document review session on April 23, 2007, at the offices of the City Attorney, Defendants’ counsel Ms. Seeba stated to attorney Engel that her IT people would like to work on getting the emails, but that they only have emails available back to December of 2005. During several of these meet and confer meetings with Defendant’s counsel, attorney Engel was informed that all emails prior to December of 2005 had been destroyed and were no longer available. Engel Aff. at para. 5 and 6.
Attorney Engel sent a letter to Defendant’s counsel Ms. Seeba dated May 1, 2007, confirming the destruction of all emails prior to December, 2005. Ms. Seeba responded with a letter dated May 3, 2007, confirming that no emails prior to December of 2005 were available, but certain emails were available after December, 2005. During the document review sessions at the St. Paul City Attorney’s office, on no less than five occasions attorney Engel sat down to meet and confer with Defendant’s counsel, Louise Seeba, and discussed the status, progress, and technicalities of the production of emails by the defendants. Engel Aff. at para. 7 and 8.
Defendants’ counsel stated that she needed a list of names of the individuals of whom Plaintiffs would like emails produced. Plaintiffs’ attorneys requested a list of all of the employees for each of the departments listed in the discovery request. Defendants’ counsel agreed to produce the lists. On June 4, 2007, counsel agreed that defendants would restore available emails of certain city employees. Plaintiffs’ and Defendants’ counsel exchanged
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letters on June 6, 2007. Defendants’ letter dated June 6, 2007, contained a list with the city employees to restore available emails. Plaintiffs’ counsel responded to defendants’ counsel with additional City employee names. Engel Aff. at para. 9.
During the document review session of Truth In Sale of Housing (TISH) Reports on March 16, 2007, at the offices of Neighborhood Housing and Property Improvement, 1600 White Bear Avenue, City of St. Paul employee Connie Sandberg stated to attorneys Shoemaker and Engel, and Plaintiff Frank Steinhauser that copies of TISH reports are only maintained for three (3) years, and that all TISH reports prior to 2004 had been destroyed. Engel Aff. at para. 10.
Defendants were put on notice of the Plaintiffs’ claims with detailed facts, circumstances and issues surrounding such claims. See John R. Shoemaker Affidavit, paras. 2, 3, 4, 5 and 6 (selective enforcement – targeting claims), 7 (claims that Defendants were targeting Plaintiffs’ rental properties at the same time many other properties near by had significant problems and code violations the City claimed it was concerned about but City ignored), 8 (Defendants admitted to learning of Steinhauser’s claim of selective enforcement during 2002 meeting), 9 (whether Defendants’ code enforcement was being applied to single family properties across the City on a “consistent basis”), 10 (PHA has similar maintenance, repair and behavior problems to Plaintiffs properties), 11 (the system of “inspections” of the privately owned rental properties in the City, including, but not limited to, exterior and interior inspections of single family and duplex properties by City Inspectors, inspections of Section 8 rental properties by PHA, and inspections by housing advocates), 12 (Defendants
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illegal conduct included intentionally claiming false code violations at Plaintiffs’ properties), 13 (Plaintiffs forced to sell their rental properties), 14 (all communications between City officials, employees, agents, non-governmental organizations (NGOs” and other third parties, including neighbors of Plaintiffs’ properties were at issue), 15 (“Problem Property 2000” initiative was relevant to Plaintiffs claims). These detailed claims provided Defendants with sufficient notice to require Defendants to place a “litigation hold” on normal document retention and destruction policies and to refrain from destroying relevant evidence.
The Complaints in each of the three cases were filed on May 5, 2004 (Steinhauser, et. al., 04-2632), March 3, 2005 (Harrilal, et. al., 05.461), and July 6, 2005 (Gallagher, et. al., 15-1348). The Complaints provide Defendants with further notice of the issues and claims subject to litigation and the evidence and documents relevant to such claims.
The first discovery requests were served in the Steinhauser, et. al. case on the defendants on November, 2004. Certainly the discovery requests would have put the Defendants on notice of the issues and claims subject to litigation and the evidence and documents relevant to such claims. See John R. Shoemaker Affidavit, paras. 16, 18, 19, 20, 21, 22, 23.
Since then, Defendants have failed to produce emails, TISH reports, PHA documentation requested or the complete documentation concerning PP2000 to Plaintiffs.
TISH reports are relevant to the Plaintiffs claims as they show the condition of the interior of properties within the City of St. Paul. Plaintiffs’ expert Don Hedquist, reviewed TISH reports of Plaintiffs’ properties in forming his opinions in support of Plaintiffs’ claims. See John R.
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Shoemaker Affidavit, para. 33. Defendants’ expert Dr. Musil opined in his expert reports herein that the TISH reports were relevant to Plaintiffs claims of damages and to Plaintiffs’ claims that they were selectively targeted. See John R. Shoemaker Affidavit, paras. 35 and 39. Nevertheless, Defendants destroyed TISH reports for 2001, 2002, and 2003 after the filing of the Complaints herein. See John R. Shoemaker Affidavit, para. At the time the Steinhauser Complaint was filed and served in May 2004, the City would have had TISH reports and files for the “current year” of 2004, and three previous years, 2001, 2002 and 2003. See John R. Shoemaker Affidavit, para. 17.
TISH reports of similarly situated properties is relevant and likely to show that Plaintiffs’ properties were illegally targeted – in violation of and in support of Plaintiffs’ claims, including claims under RICO, Fair Housing, Civil Rights, Antitrust, Abuse of Process, and Tortious Interference with Contract and Business Expectancy. Engel Aff. at para. 11.
Defendant Dawkins prepared a memo to code enforcement inspectors regarding the discriminatory impact of code enforcement. This evidence along with other relevant documents, was produced anonymously in one of the five (5) anonymous packets received by John Shoemaker. See Exhibit “39” of Affidavit of John Shoemaker, paras. 63-68, 71-73. It is reasonably likely that this type of evidence would have been contained in the emails from 2002-2005, the time period in which Plaintiffs claim illegal code enforcement. However, all emails during Defendant Dawkins’ employment have been destroyed, and this is prejudicial to the Plaintiffs. Engel Aff. at para. 23.
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The power of the court to impose sanctions for discovery arises from two distinct authorities. The Federal Rules of Civil Procedure provide for sanctions when a party fails to respond to discovery requests or when a party fails to comply with a court order regarding discovery. See Fed.R.Civ.P. 37(b) and (d). Sanctions also may be imposed if a party violates Rule 26(g) by submitting false certifications. If the party's conduct falls outside of conduct sanctionable under the Rules, the court may impose sanctions based on its inherent authority to control its own judicial proceedings. See E-Trade Securities, LLC, v. Deutsche Bank AG, 230 F. R. D. 582, 586 (D. Minn. 2005)(citing Stevenson v. Union Pac. R.R. Co., 354 F.3d 739, 745 (8th Cir. 2004); see also Chambers v. NASCO, Inc. 501 U.S. 32, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991)). The range of sanctions available to the court includes awarding of attorney fees and costs, imposing an adverse inference instruction to the jury, directing factual findings, and finding a default judgment against the spoliator. See E-Trade Securities, LLC, at 586-587 (citing Fed.R.Civ.P. 37(b)(2)(A)-(C)).
ARGUMENT
Spoliation is the intentional destruction of evidence and when it is established, the fact finder may draw inference that the evidence destroyed was unfavorable to the party responsible for its spoliation. See E-Trade, 230 F.R.D. at 587 (citing Black's Law Dictionary 1401 (6th ed.1990); see also Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 216 (S.D.N.Y.2003)(spoliation of evidence is the destruction or significant alteration of evidence, or the failure to preserve property for another's use as evidence in pending or reasonable foreseeable litigation); see also West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d
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Cir.1999)).
In the E-Trade case, the plaintiff claimed that, inter alia, defendant had destroyed irreplaceable vital evidence; suppressed large quantities of discoverable material, and failed to search for responsive documents. 230 F.R.D. at 587.
Like the E-Trade case, the Defendants in this case have destroyed irreplaceable vital evidence (TISH reports from 2001, 2002 and 2003, and all emails and other electronically delivered communications prior to December of 2005), suppressed discoverable material (shown by the five (5) packets of undisclosed anonymous material), and failed to search for responsive documents (PHA cooperative, police service, and other agreements with the City).
The Court must determine when the Defendant's duty to preserve evidence was triggered. See E-Trade, 230 F.R.D. at 587 (citing Zubulake, 220 F.R.D. at 216).
Defendants’ duty herein to preserve evidence was triggered no later that upon service of the Complaint in Steinhauser in May 2004. In fact, Defendants received multiple Notice of Claim letters from the Plaintiffs during 2003 through early 2005 detailing the nature of the claims. Certainly, Defendants duty to preserve evidence arose no later than when they were served with a more than 80 page Steinhauser Complaint in May of 2004 detailing the Plaintiffs claims that (1) Defendants had selectively targeted and were continuing to target Plaintiffs and other low-income landlords with discriminatory code enforcement, (2) that defendants were ignoring the clearly visible code violations on the exteriors of properties in the neighborhoods of Plaintiffs’ rental properties, (3) that Plaintiffs had placed the condition of their properties and those surrounding their properties at issue (4) that the inspection
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programs for single family and two-family rental homes in the City were relevant to Plaintiffs’ claims, (5) that the communications between City officials and employees and with certain third parties were relevant to Plaintiffs’ claims, (6) that PHA had rental properties and tenants that were similar in many respects to those of Plaintiffs and had their own inspection system, (7) that Plaintiffs considered the City’s “Problem Property 2000” initiative to be very significant to Plaintiffs’ claims.
The destruction of relevant evidence by the Defendants and others working together with them after receiving from Plaintiffs specific discovery requests for the production of documents, makes the destruction all the more egregious.
The obligation to preserve evidence begins when a party knows or should have known that the evidence is relevant to future or current litigation. See E-Trade, 230 F.R.D. at 588 (citing Stevenson v. Union Pac. R.R. Co., 354 F.3d 739, 746 (8th Cir. 2004); see also Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 216 (S.D.N.Y.2003). If destruction of relevant information occurs before any litigation has begun, in order to justify sanctions, the requesting party must show that the destruction was the result of bad faith. Id. Bad faith need not directly be shown but can be implied by the party's behavior. For example, the Eighth Circuit Court of Appeals has explained that, (1) a party's decision to selectively preserve some evidence while failing to retain other evidence or (2) a party's use of the same type of evidence to their advantage in prior instances, may be used to demonstrate a party's bad faith. Id (citing Stevenson, 354 F.3d at 747-48).
In order to determine whether sanctions are warranted when documents have been
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destroyed due to a company's retention policy prior to litigation, the court must consider: (1) whether the retention policy is reasonable considering the facts and circumstances surrounding those documents, (2) whether lawsuits or complaints have been filed frequently concerning the type of records at issue, and (3) whether the document retention policy was instituted in bad faith. See E-Trade, 230 F.R.D at 588-589 (citing Lewy v. Remington Arms Co., 836 F.2d 1104, 1112 (8th Cir.1988)).
However, when the destruction of evidence occurs after litigation is imminent or has begun, no bad faith need be shown by the moving party. 230 at 589. When litigation is imminent or has already commenced, "a corporation cannot blindly destroy documents and expect to be shielded by a seemingly innocuous document retention policy." See Id. at 589 (citing Stevenson, 354 F3d at 749); see also Lewy, 836 F.2d at 1112.
An imposition of sanctions is only merited when the moving party can demonstrate that they have suffered prejudice as a result of the spoliation. See E-Trade, 230 F.R.D. 592 (citing Stevenson, 354 F.3d at 748).
PREJUDICE TO PLAINTIFFS
In the case before us, Plaintiffs have been prejudiced by the defendants’ destruction of evidence.
1.
TISH Reports.
During 2002 through 2005, the City’s TISH program was administered by Dawkins’ NHPI department. The normal document retention policy (without the litigation hold requirement being considered here) was for the City to maintain the current year of TISH
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reports and three previous years of reports.
Thus, in March 2007, at the close of discovery, the TISH officials had the following TISH reports to produce to Plaintiffs: 2007 (current year) and 2006, 2005, 2004.
In 2006, the TISH reports that should have been available in the absence of litigation, would have been 2006 (current year) and 2005, 2004, and 2003. The 2002 TISH reports would have been destroyed after January 2006!
In 2005, the TISH reports that should have been available in absence of litigation, would have been 2005 (current year) and 2004, 2003, and 2002. The 2001 TISH reports would have been destroyed after January 2005!
In May 2004, the TISH reports that should have been available in absence of litigation, would have been 2004 (current year) and 2003, 2002, and 2001. The filing of the Steinhauser Complaint in May 2004 and discovery requests from Plaintiffs later that year to Defendants, and the specific requests in 2004 by Defendants to Plaintiffs for TISH reports, clearly triggered the duty of Defendants to maintain copies of all TISH reports Defendants had in their possession at that time – 2001, 2002, 2003 and 2004 TISH reports. Defendants thereafter, repeatedly destroyed TISH reports sometime after the turn of each new year.
The destroyed TISH Reports for 2001 through 2003 were relevant and a necessary part of the evidence to support Plaintiffs claims of discriminatory code enforcement in that Plaintiffs claim much of the City’s housing stock was similar in exterior and interior conditions to Plaintiffs’ rental properties before, during and after the period of Defendants’ PP 2000 initiative (1999-2001), during the period Defendants were developing their “targeting”
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polices (2001-2002), and during the time Defendants were targeting Plaintiffs with “code to the max” enforcement operations, and that the 2001-2003 TISH reports would have supported Plaintiffs’ claims.
The TISH reports that Defendants were not able to destroy, reports for 2004 through 2007, a time period in which Plaintiffs were forced by the effect of illegal targeting to sell their rental properties, demonstrate that the exterior and interior conditions of the properties owned by PHA, City officials and employees, non-governmental organizations, other entities and officials, and home owners adjacent to Plaintiffs’ former properties, were similar in up keep and need of repairs.
Defendants in 2004, recognizing the significant of the TISH reports to their claims that the code operations against Plaintiffs were justified due to poor conditions of Plaintiffs properties, served the Steinhauser Plaintiffs with a document request specifically requesting production of all TISH reports Plaintiffs had in their possession. Plaintiffs produced TISH reports for 2003 through 200_.
Defendants’ counsel inquired of Plaintiffs in their depositions about the TISH reports on Plaintiffs’ properties, made the TISH reports exhibits to the deposition, and provided the TISH reports to Defendants’ experts. Defendants’ experts relied upon these reports and claimed they were relevant to defeat Plaintiffs’ claims.
2.
Emails and Electronically Stored Documents.
Plaintiffs from early on in the Steinhauser case made clear that communication between City official, employees and third parties was relevant to Plaintiffs claims that Defendants
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intentionally discriminated against them and their tenants. Specific requests by Plaintiffs to Defendants were made in 2004 for all emails. Nevertheless, Defendants failed to save the electronic versions of these relevant documents and instead destroyed the emails for the entire time period up through when Dawkins and Mayor Kelly left office.
3.
Documents Not Disclosed By Defendants.
The Affidavit of John Shoemaker details the relevant evidence that was withheld from production to and inspection by Plaintiffs and this willful non-disclosure prejudiced Plaintiffs by leaving them without key documents to use with inspectors in their depositions. Many inspectors answered with the “I don’t recall” line where if Plaintiffs would have had the documents that were withheld, the inspectors would have been forced to recall the facts as recorded in the documents.
SANCTIONS
Based on this alleged conduct, Plaintiffs in each of the three cases requests that the court impose sanctions sufficient to punish and deter Defendants’ misconduct. The conduct of the defendants in destroying evidence and failing to disclose documents rises to the level of intentional spoliation of evidence and therefore the court should sanction them appropriately by finding judgment in favor of Plaintiffs, or in the alternative, issue adverse inference instructions to the jury.
In E-Trade, the court found that relevant email was deleted by NSI's failure to place a litigation hold on mailboxes or preserve the backup tapes for the relevant time period. Email messages in the record demonstrate that there are internal communications that shed light on
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the company’s knowledge of Reed's actions in the Stock Lending Group and measure the company took after notice of the problems with the transactions. See E-Trade, 230 F.R.D. at 592. NSI itself has identified additional mail boxes it deemed relevant to search for this litigation but failed to preserve at an earlier date. This destruction of potentially relevant evidence has prejudiced the plaintiffs in presenting their case about NSI's involvement in and knowledge of the transactions in question. Id.
In a District Court opinion out of Florida, the Court found that EEOC (the plaintiff) was prejudiced by the destruction of the records. “The question squarely presented is whether this prejudice warrants the ultimate sanction of directing summary judgment on the liability issue for the relevant time period.” See EEOC v. Jacksonville Shipyards, Inc., 690 F.Supp. 995, 997 (M.D.Fla., 1988).
In EEOC, the Court held that the Defendant destroyed records for which it was on notice that it had a legal duty to preserve, and that duty is imposed, in part, to ensure that those records are available for litigation of a discrimination charge. See EEOC, 690 F. Supp. at 998 (citing Rozen v. District of Columbia, 702 F.2d 1202, 1204 (D.C.Cir.1983)). Rule 37 deals with similar conduct when the legal duty to preserve evidence is imposed in the course of a lawsuit. Id (citing Wm. T. Thompson Co. v. General Nutrition Corp., 593 F.Supp. 1443, 1455 (C.D.Cal.1984)). The Court in EEOC held that the present case logically extends Rule 37 principles to the situation in which the legal duty to preserve evidence arises by force of administrative regulation prior to the commencement of a lawsuit. Two of the policies underlying Rule 37-the elimination of profit from failure to comply with the legal duty to
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preserve evidence and the general deterrent effect that sanctions for an offense will have on the instant case and on other litigation, (citing Aztec Steel Co. v. Florida Steel Corp., 691 F.2d 480, 482 (11th Cir.1982); Cine Forty-Second Street Theatre Corp. v. Allied Artists Pictures Corp., 602 F.2d 1062, 1066 (2d Cir.1979)) -particularly justify the Court's decision to extend Rule 37 principles to the present case. See EEOC, 690 F. Supp. at 998.
In this case, like EEOC, the Defendants destroyed records for which it was on notice that it had a legal duty to preserve, and that duty is imposed, in part, to ensure that those records are available for litigation of a discrimination charge. Further, the policies underlying Rule 37- the elimination of profit from failure to comply with the legal duty to preserve evidence and the general deterrent effect that sanctions for an offense will have on the instant case and on other litigation – fit squarely within the context of the actions of the Defendants in destroying TISH reports, emails, and the non-production of relevant documents.
The choice of what sanction to impose is vested in the court's discretion. The court considers four factors in deciding whether to impose the drastic sanction of dismissal (against a plaintiff) or entering judgment (against a defendant): (1) evidence of willfulness or bad faith; (2) prejudice to the adversary; (3) whether the violating party had notice of the potential sanction; (4) whether less drastic sanctions have been imposed or ordered. See Phillips v. Cohen, 400 F.3d 388, 402 (6th Cir. 2005)(citing Bass v. Jostens, Inc., 71 F.3d 237, 241 (6th Cir.1995)). In Phillips, the magistrate judge determined that he could not know how much the unavailability of these documents prejudiced plaintiffs' case until hearing the merits. Even assuming this conclusion was within his discretion, the magistrate judge granted the
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Secretary's motion for summary judgment one month later, leaving the sanctions issue unresolved. This was problematic. The magistrate judge never made an assessment of the quality of the evidence lost and did not mention the sanctions issue in its summary judgment order. If anything, the magistrate judge appears to have found that both parties suffered as a result of the lost evidence as it exposed flaws in their expert reports. However, the magistrate judge had previously found that plaintiffs were entitled to sanctions. The magistrate judge's failure to address the sanctions issue in light of the summary judgment ruling resulted in the imposition of no sanctions of any kind. This was an abuse of discretion under the circumstances. Id.
In the case before the Court, the Defendants are bringing a dispositive motion for summary judgment, yet evidence that is relevant to Plaintiffs’ claims has been destroyed. Defendants should be prohibited from bringing their motion for summary judgment. Defendants in this case should not be allowed to profit from failure to comply with the legal duty to preserve evidence and the general deterrent effect that sanctions for an offense will have on the instant case and on other litigation.
In U.S. v. Phillip Morris, the Court found that a monetary sanction is appropriate. The Court stated that “it is particularly appropriate here because we have no way of knowing what, if any, value those destroyed emails had to Plaintiff's case; because of that absence of knowledge, it was impossible to fashion a proportional evidentiary sanction that would accurately target the discovery violation. Despite that, it is essential that such conduct be deterred, that the corporate and legal community understand that such conduct will not be
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tolerated, and that the amount of the monetary sanction fully reflect the reckless disregard and gross indifference displayed by Philip Morris and Altria Group toward their discovery and document preservation obligations. Consequently, Philip Morris and Altria Group will be jointly required to pay a monetary sanction of $2,750,000 into the Court Registry no later than September 1, 2004. In addition, Phillip Morris and Altria Group will be required to reimburse the United States for the costs associated with a Fed.R.Civ.P. 30(b)(6) deposition on email destruction issues.” See U. S. v. Phillip Morris USA, Inc., 327 F.Supp.2d 21, 26 (D.D.C. 2004).
EEOC effectively sought a limited default sanction to redress the failure to preserve evidence (the loss of the Change of Status Sheets). See EEOC, 690 F. Supp. at 998. The Court declined to impose this extreme sanction of default, reasoning that “the default sanction under Rule 37 is a last resort, to be ordered only if noncompliance is due to willful or bad faith disregard of court orders which cannot reasonably be expected to be remedied by lesser but equally effective sanctions.” Id (citing Adolph Coors Co. v. Movement Against Racism & the Klan, 777 F.2d 1538, 1542-43 (11th Cir.1985). However, the EEOC Court stated “Although the Court believes that failure to insure the preservation of records after receiving official notice is “willful” behavior, (citing Wm. T. Thompson Co., 593 F.Supp. at 1455), the law of this Circuit demands a greater record of intransigence to justify the default sanction. See EEOC, 690 F. Supp. at 998 (citing Ford v. Fogarty Van Lines, Inc., 780 F.2d 1582, 1583 (11th Cir.1986) (clear record of delay or contumacious conduct by party necessary to justify dismissal or default sanction); see also Cox v. American Cast Iron Pipe Co., 784 F.2d 1546,
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1566(11th Cir.) (court must make finding of bad faith resistance to discovery orders and indicate on record that less severe sanctions than dismissal were considered and rejected)). Additionally, the Court perceived that lesser sanctions may effectively remedy the prejudice suffered by EEOC. In particular, the Court stated that if defendant is correct in asserting that the lost records can be reconstructed, then the appropriate remedy is to require that defendant bear the cost and burden of accurately reconstructing the records. Id (citing United States v. American Telephone & Telegraph Co., 86 F.R.D. 603, 657 (D.D.C.1980)). Further, the Court stated that “since some evidence is available on the relevant issue, the Court also could limit defendant's production of evidence in opposition to EEOC's presentation, and equitably adjust the level of proof necessary to demonstrate discrimination. Id at 998-999 (citing Hicks v. Gates Rubber Co., 833 F.2d 1406, 1419 (10th Cir.1987) (granting presumption to plaintiff that records destroyed in violation of 29 C.F.R. § 1602.14 would support her case).
In the case before the Court, a default sanction is appropriate. The Defendants destroyed TISH reports and emails. Defendants have promised to produce emails from December of 2005 forward, but cannot produce emails before that time period (see letter from Seeba to Engel, Ex. “D” to Engel Aff.).
Defendants’ failure to insure the preservation of records after receiving official notice of claim letters, the filing of the complaints, and requests for production of documents is the “willful” behavior contemplated by the Court in EEOC to justify the default sanction. Further, the Court also considered limiting defendant's production of evidence in opposition to Plaintiff EEOC's presentation, and equitably adjusting the level of proof necessary to
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demonstrate discrimination.
The Plaintiffs request that the Court consider all of the same alternatives for sanctions as considered by the Court in EEOC, including not only the default sanction of judgment against Defendants and in favor of Plaintiffs on the issues of liability and/or damages, but also the following: a monetary sanction as was entered in Phillip Morris; that Defendants’ Motions for Summary Judgment herein are dismissed; for an adverse inference to be made against Defendants and in favor of Plaintiffs as part of Defendants’ Motions for Summary Judgment; that factual findings are directed in favor of Plaintiffs; that Plaintiffs are awarded their attorney’s fees, expert fees, costs and expenses incurred by Plaintiffs as a result of Defendants’ wrongful conduct, including deposition costs for all depositions the Court authorizes to be taken or supplemented; and an adverse inference instruction shall be made to the jury at trial.
Rule 37 (a) (4) provides that, “[i]f the motion is granted or if the disclosure or requested discovery is provided after the motion was filed, the court shall, after affording an opportunity to be heard, require the party or deponent whose conduct necessitated the motion or the party or attorney advising such conduct or both of them to pay to the moving party the reasonable expenses incurred in making the motion, including attorney’s fees.” Fed.R.Civ.P. 37(a)(4)(A) (West 2007). Certain limited circumstances are set out in Rule 37 (a)(4)(A) where the Court is authorized to forgo an award of costs and fees to the movant. Id.
Plaintiffs seek reimbursement for the expenses and attorney’s fees incurred herein as a result of Defendants’ failure to comply with the Rules.
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CONCLUSION
For the reasons set forth above, Plaintiffs request that their motion for sanctions be granted. Plaintiffs also request an award of the Court for reasonable attorney fees and costs in bringing this motion.
Respectfully submitted,
SHOEMAKER & SHOEMAKER, P.L.L.C.
Dated: August 6, 2007 By: s/ John R. Shoemaker
John R. Shoemaker (Attorney Lic. #161561)
Centennial Lakes Office Park
7701 France Avenue South, Suite 200
Edina, Minnesota 55435
(952) 841-6375
Attorneys for Plaintiffs Steinhauser, et. al. Attorneys for Plaintiffs Harrilal, et. al.
THE ENGEL FIRM, PLLC
Dated: August 6, 2007 By: s/ Matthew A. Engel
Matthew A. Engel (Attorney Lic. #315400)
11282 86th Avenue North
Maple Grove, Minnesota 55369
T: (763) 416-9088
F: (763) 416-9089
Attorney for Plaintiffs Gallagher, et. al.

Friday, August 03, 2007

RICO Suit/ Plaintiffs objections to magistrate Nelsons order of July 16, 2007

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Frank J. Steinhauser, III, et al., Civil No. 04-2632
JNE/SRN
Plaintiffs,
v. PLAINTIFFS’ OBJECTIONS TO MAGISTRATE NELSON’S ORDER OF JULY 16, 2007
City of St. Paul, et al.,
Defendants.
Sandra Harrilal, et al., Civil No. 05-461
JNE/SRN
Plaintiffs,
v.
Steve Magner, et al.,
Defendants.
Thomas J. Gallagher, et al., Civil No. 05-1348
JNE/SRN
Plaintiffs,
v.
Steve Magner, et al.,
Defendants.
TO THE HONORABLE JUDGE ERICKSEN:
NOW COMES the Plaintiffs, in order to file their Objections to Magistrate Nelson’s
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July 16, 2007, Order (04-2632, ECF 112; 05-461, ECF 88; and 05-1348, ECF Doc. No. 82), pertaining to Plaintiffs’ Motion to Compel Discovery (05-1348, ECF Doc. Nos. 39 and 40), and to respectfully show the Court:
INTRODUCTION
Magistrate Nelson denied Plaintiffs’ joint motion to compel the production of the tax records, banking records and cell phone records of Defendant Steve Magner, a supervisor of vacant buildings for the Neighborhood Housing and Property Improvement office (N.H.P.I.) of St. Paul and a member of the Problem Property Unit of N.H.P.I.
Plaintiffs sought these personal records to support claims that Defendant Magner had committed the predicate acts of “attempted extortion” and “extortion” under the federal Racketeering Act, 18 U.S.C. Section 1961, et seq. (hereinafter referred to as “RICO Act”).
Plaintiffs submit that the affidavits and sworn statement from four individuals that were presented to the Magistrate on Plaintiffs’ Joint Motion to Compel, constituted direct evidence of “attempted extortion” by Defendant Magner in his official position as a supervisor of code enforcement for Defendant City. Plaintiffs RICO claims include extortion and attempted extortion as pleaded in Plaintiffs’ Complaints (see for example, Steinhauser Third Amended Complaint, ECF 60-1, Count I, paragraph 213 (a)).
Plaintiffs were seeking Magner’s personal records as further evidence that Magner had committed the RICO predicate act of “attempted extortion” and for evidence that he had committed “extortion” under the RICO Act.
On the issue of tax and banking records, Magistrate Nelson held that Plaintiffs had not
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produced evidence that Magner had derived any income from the alleged pattern of racketeering (Order, page 3) and refused to order the production of those records.
Plaintiffs were also seeking Magner’s personal cell phone records as further evidence of the RICO predicate acts of “attempted extortion” and “extortion.”
Magistrate Nelson held that while these personal cell phone records would show phone numbers and the length of calls made by Magner, these records “could not show any improper conduct, which would depend on a showing of the particular content of those conversations” and therefore these records were not discoverable (Order, page 3).
Plaintiffs submit that Magistrate Nelson’s decision is erroneous, misplaced, and contrary to law.
FACTUAL BACKGROUND
Prior to the close of discovery, Plaintiffs’ specifically requested Defendant Magner to produce: “The state and federal and state tax returns, personal bank records, and personal cell phone records … for the years 1999 through 2006.” See Defendants’ Response to Plaintiffs’ Request for Production of Documents (Set II) in Steinhauser, et al., Response No. 9, attached as Exhibit 6 to the Affidavit of John R. Shoemaker (05-1348, ECF Doc. No. 72 and attachments); and Defendants’ Response to Plaintiffs Harrilal and Johnson’s Request for Production of Documents, No. 46, attached as Exhibit 7 to the Affidavit of John R. Shoemaker (05-1348, ECF Doc. No. 72 and attachments).
Defendants objected to production of these personal documents on the basis that the request sought, “information which is irrelevant, immaterial and not likely to lead to the
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discovery of admissible evidence and requests information protected by the Minnesota Government Data Practices Act, Minn. Stat. 13.43, Subd.4, as non-public.” See Defendants’ Response No. 9 (Steinhauser, et al.), attached as Exhibit 6 to the Affidavit of John R. Shoemaker; and Defendants’ Response, No. 46 (Harrilal, et al), attached as Exhibit 7 to the Affidavit of John R. Shoemaker (05-1348, ECF Doc. No. 72 and attachments).
Plaintiffs filed as part of their motion, three (3) affidavits and one (1) sworn statement from four individuals relating to two different properties describing Mr. Magner’s commission of, at the very least, the predicate RICO acts of attempted extortion. Part of the evidence before Magistrate Nelson was as follows:
Affidavit of Nancy Osterman.
Nancy Osterman provided a sworn Affidavit dated 6/22/05[Exhibit 2, Affidavit of John R. Shoemaker]. Ms. Osterman’s home at 14 Jessamine East was condemned and a code compliance demanded by Magner. After substantial repairs totaling about $10,000, Magner told her that he would not allow her to complete the renovation but she would be required to sell her home to someone of Magner’s choosing and if she refused, her home would be demolished. See Paragraphs 8-10, Affidavit of Osterman.
Affidavit of Julian Jayasuriya.
Julian Jayasuriya has provided a sworn Affidavit dated 6/22/05 [Exhibit 3, Affidavit of Shoemaker]. Mr. Jayasuriya purchased a property owned by Nancy Osterman in 2003 after Ms. Osterman informed him that Magner had threatened to demolish her condemned home if she did not sell her home to a buyer of Magner’s choosing at a price drastically below the fair market value of her home. See Paragraphs 5 and 6, Affidavit of Jayasuriya. Mr. Jayasuriya states that he purchased Osterman’s home for approximately $90,000 in value. Paragraph 5, Affidavit of Jayasuriya. Mr. Jayasuriya stated that Inspector Magner has on occasion threatened him with dire consequences including condemnation of his properties when Mr. Jayasuriya expressed disagreement with Magner’s methods of code enforcement and ethics. See Paragraph 7, Affidavit of Jayasuriya. Mr. Jayasuriya met with the St. Paul City Council on June
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15, 2005, and stated that no one from the City ever answered his questions as to who was really benefiting from the forced demolition of his property or how Magner could operate his own real estate placement firm or tie forcing sales of properties into Code Compliance. See Paragraph 16, Affidavit of Jayasuriya. Mr. Jayasuriya stated that it was his belief that the City had a problem controlling Magner and other code enforcement, Paragraph 17, Affidavit of Jayasuriya, and that Mr. Jayasuriya was concerned that Magner may be able to continue to retaliate against him for not giving into his demands that Magner control the sale of14 Jessamine or other properties, under cover of enforcing City Codes. See Paragraph 21, Affidavit of Jayasuriya.
Statement of Douglas Hayes.
Douglas Hayes has provided a notarized statement dated 6/10/07, wherein he supports the claims made by Osterman in her affidavit [Exhibit 4, Affidavit of Shoemaker]. Mr. Hayes was living with Osterman at 14 Jessamine when condemned and a code compliance required. Page 1, Statement of Hayes. Mr. Hayes worked on trying to meet Magner’s code compliance demands. Magner stopped by the house periodically to check on the progress. Magner eventually told Hayes that he might as well quit working on the home as the home was going to the City Council and the home will be demolished. Page 3, Statement of Hayes. Mr. Hayes informed Magner that he and Osterman were thinking of selling the home. Magner replied that they could not just sell the home to anyone but that they had to sell their home to someone Magner had worked with before. Page 3, Statement of Hayes. Magner told Hayes that if he and Osterman did not sell the home as directed, they would be left with a hole in the ground. Page 4, Statement of Hayes. Magner told Hayes that Magner knew a guy who he had worked with before who buys vacant homes and was someone who could get the work done. Page 4, Statement of Hayes. Magner told Hayes that he and Osterman should take whatever they could get or they would be left with a hole in the ground. Hayes then called the buyer that Magner suggested and that buyer came to the 14 Jessamine home to look it over while Hayes was present. Page 4, Statement of Hayes. Hayes showed the buyer the code compliance inspection report, and the buyer then prepared a purchase agreement proposal to buy the home for $40,000.00 that he handed to Hayes. Page 4, Statement of Hayes. Hayes states that he and Osterman rejected the proposal because the home was worth approximately $150,000.00. Pages 4 and 5, Statement of Hayes. Hayes states that the 8-15-03 Purchase Agreement that is attached to his statement is the same purchase agreement presented to him by Magner’s buyer. Page 5, Statement of Hayes. Wally Nelson admitted in his deposition that this Purchase Agreement was in fact his purchase proposal. See Nelson’s Deposition, pages 79-80, Exhibit 3, Matthew Engel Affidavit.
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Lois Jacobs, a St. Paul property owner has provided a sworn Affidavit dated 6/11/07 [Exhibit 5, Affidavit of Shoemaker]. Ms. Jacobs details her experience with Magner during 2004 and thereafter. Ms. Jacobs owns a home located at 1008 Farrington Street that she purchased for her grandson to live in. She says that her home was in good condition. In May 2004, her home was condemned by the City because the electricity had been turned off for non-payment. Paragraph 3, Jacobs’Affidavit. Even though Ms. Jacobs paid the overdue bill, the City would not remove the condemnation. She says that after her home was condemned, Magner told her that her home could not be re-occupied until she completed a code compliance. See Paragraph 4, Jacobs’ Affidavit. Following the inspection results of the code compliance inspection, Ms. Jacobs discovered that she would have approximately $32,000.00 in renovation costs. She also states that she had considerable expenses in repairing damages caused to her doors and windows from forced entries and boarding by the City. While Ms. Jacobs home was under Magner’s control, he offered to buy her home for $50,000.00 cash. Ms. Jacobs refused his offer. Paragraph 5, Jacobs’ Affidavit. Ms. Jacobs states that she notified certain City officials about her experience with Magner and his offer to purchase her home. See Paragraph 7, Jacobs’ Affidavit. She told City officials that she thought it was improper for a City employee involved in condemnation of her home to then make an offer to purchase the home. Even though she pleaded with City officials, her home remained condemned and the City has continued to require a code compliance. See Paragraph 8, Jacobs’ Affidavit.
ISSUE
Plaintiffs submit that Magistrate Nelson’s decision is erroneous, misplaced, and contrary to law in denying Plaintiffs’ motion to compel. The discovery issue presented to Magistrate Nelson was whether it was proper to compel the production of personal tax returns, bank records and cell phone records of Defendant Magner. Plaintiffs submit that discovery of Mr. Magner’s tax returns, bank records and cell phone records is reasonably calculated to lead to the discovery of admissible evidence related to Plaintiffs’ claims of “attempted extortion” and/or “extortion.”
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Plaintiffs direct the Court’s attention to Plaintiffs’ Joint Letter Brief in Support of Plaintiffs’ Motion to Compel and supporting affidavits and exhibits (05-1348, ECF Doc. Nos. 65, 71 and 72) for a more complete statement of Plaintiffs’ arguments and authorities.
Magistrate Nelson stated in her Order that, “Parties generally are entitled to conduct liberal discovery into any relevant non-privileged material. Fed. R. Civ. P. 26(b)(1) (Order, page 2). Rule 26 of the Federal Rules of Civil Procedure, provides that where the requested discovery “appears reasonably calculated to lead to the discovery of admissible evidence, the discovery request is proper.” Fed. R. Civ. P. 26(b)(1) (West 2007).
Given the nature of Plaintiffs RICO claims of mail fraud, wire fraud, bank fraud, attempted extortion and extortion, Magner’s tax, banking and personal cell phone records fall within the proper scope of discovery as promulgated by the Rules. Plaintiffs’ request is not unreasonable, overbroad, or unduly burdensome. Plaintiffs are seeking the bank records, tax returns and personal cell phone records from one of the Defendants from three (3) cases and only where the evidence clearly shows “attempted extortion” by Magner in his code enforcement role against owners of single family properties, properties similar to Plaintiffs’ properties.
“Attempted extortion” is an illegal predicate act under the RICO Act. 18 U.S.C. § 1961. Under the RICO Act, “Racketeering activity” is defined as, “(A) any act or threat involving…extortion, or (B) any act which is indictable under any of the following provisions of title 18, United States Code §1951 (relating to interference with commerce, robbery, or extortion). 18 U.S.C. §1961 (emphasis added).
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The Hobbs Act provides that: “(a) Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined under this title or imprisoned not more than twenty years, or both.” See 18 U.S.C. §1951(a). The Hobbs Act further defines extortion as “the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right.” 18 U.S.C. § 1951(b)(2) (emphasis added).
Federal Courts have also recognized “attempted extortion” as a predicate act within the RICO Act. See McLaughlin v. Anderson, 962 F.2d 187, 194 (2nd Cir. 1992) ( financing officer alleged threat to lose successful bidder's forms unless bidder entered joint venture H.U.D. project, was use of fear of economic loss needed for Hobbs Act extortion claim and predicate act of attempted extortion for civil RICO claim); see also Dooley v. Crab Boat Owners Ass'n., 271 F.Supp.2d 1207, 1214 (N.D.Cal.2003) (defendants attempts through threats and property damage to obtain control over fishing company's intangible property could amount to attempted extortion, Hobbs Act violation, and RICO predicate acts).
The predicate acts of “attempted extortion” and “extortion” relate to the other predicate acts detailed by Plaintiffs in their Complaints to show relatedness and continuity, including mail fraud, wire fraud and bank fraud, and other acts of Magner and other Defendants, many of who were members of NHPI. In order to prove a pattern of racketeering activity, Plaintiffs must show that “the racketeering predicates are related, and that they
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amount to or pose a threat of continued criminal activity.” H.J. Inc. v. Northwestern Bell Tel., 492 U.S. 229, 239 (1989). The “relatedness” element of the pattern test embraces “criminal acts that have the same or similar purposes, results, participants, victims or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events.” Id. at 240.
Tax returns and banking records
In seeking the tax returns and bank records of Magner, Plaintiffs were seeking additional evidence that Magner had committed a RICO predicate act of “attempted extortion”. The bank records, for example, could in fact show that at the time Jacobs claims Magner offered her $50,000 in cash to buy her condemned property subject to code compliance requirements by Magner, that Magner in fact had $50,000 in available funds. That would constitute evidence to support a claim of attempted extortion. Magner’s tax returns could show “other income” that would have been available to him for carrying out his attempt at extorting Jacobs.
Plaintiffs are seeking the evidence that Magistrate Nelson states Plaintiffs do not have – the bank records and tax returns - that would show Magner derived income and committed “extortion,” a second RICO predicate act. These financial records clearly fall within the requirement that a party’s request be “reasonably calculated to lead to the discovery of admissible evidence,” and be related to their claims, as these records could show that Magner has derived income from the alleged extortion and pattern of racketeering.
In Dooley v. Crab Boat Owners Ass’n, the Defendants contended that none of the acts,
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even if proved, could be considered extortion or attempted extortion because defendants did not obtain or try to obtain property. 271 F.Supp.2d at 1212. The court held that defendants attempted to acquire “something of value” through their threats, warnings and property damage. Id. at 1214.
The Federal District Court for the Eastern District of New York has held that where claims of fraud, unjust enrichment, and RICO conspiracy were brought against physicians who allegedly performed unnecessary diagnostic testing on automobile insureds, the physician's financial records, including tax returns, were discoverable as relevant to show that the physicians profited from the willingness to order tests that were billed to an insurer as reimbursable personal injury protection (PIP) benefits by medical clinics. See State Farm Mut. Auto. Ins. Co. v. CPT Medical Services, P.C, 375 F.Supp.2d 141 (E.D.N.Y.2005). The Federal District for the Eastern District of Pennsylvania has held that given the broad definition of "relevance" articulated in Rule of Civil Procedure pertaining to discovery, financial records requested by a plaintiff from a defendant were relevant in a civil RICO action against the defendant and members of his family, where the financial records pertained to the transaction involving family members and the suit was based on their allegedly fraudulent transactions. See Constitution Bank v. Levine, 151 F.R.D. 278 (E.D.Pa.1993).
Magistrate Nelson’s determination that, “Plaintiffs have produced absolutely no evidence that he has derived any income from the alleged pattern of racketeering” was clearly erroneous and contrary to law. Plaintiffs are seeking to show evidence Magner “derived income” from the alleged pattern of racketeering through his bank records and tax returns. Case 0:05-cv-01348-JNE-SRN Document 84 Filed 07/30/2007 Page 10 of 13

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Plaintiffs have already presented evidence of the predicate act of “attempted extortion.” Because “attempted extortion” is a RICO predicate act, Plaintiffs should be allowed to examine Magner’s bank records and tax returns to determine if in fact he has derived any income that would constitute the additional predicate act of “extortion.”
The fact the Magner was unsuccessful in his attempted extortion, or that he did not derive income from those individuals, does not mean that an illegal predicate act was not committed or that discovery of his bank records and tax returns should not be allowed. As the Court held in MacLaughlin, “that the extortion effort ultimately failed can not exonerate Anderson, since Macgall alleged, and the Hobbs Act forbids, attempted extortion.” See McLaughlin at 194 (citing 18 U.S.C. § 1951(a)).
Personal Cell Phone Records
Magistrate Nelson also denied Plaintiffs’ request to compel the production of Magner’s personal cell phone records because “the information that Plaintiffs seek – the number and frequency of their (Magner and Nelson’s) phone conversations – could not show any improper conduct, which would depend on a showing of the particular content of those conversations.” (Order, page 3). This determination is clearly erroneous and contrary to law.
Again, “Parties generally are entitled to conduct liberal discovery into any relevant non-privileged material,” and “Parties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party.” Fed. R. Civ. P. 26(b)(1).
Plaintiffs contend that the number and frequency of Magner and Wally Nelson’s phone conversations – not just the content of those conversations - are in fact relevant to Plaintiffs’
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claims. The amount of time Magner was spending on his personal cell phone talking to Nelson during City business hours and the frequency of those calls during those hours, would be additional evidence of Magner’s improper involvement with Nelson, as Plaintiffs have claimed. Additionally, phone numbers of other property owners similarly subject to attempted extortion and/or extortion may be discovered in Magner’s cell phone records. Other phone numbers may lead to fellow conspirators involved in racketeering activity with Magner.
CONCLUSION
In sum, given the nature of the claims against Magner, his tax, banking and personal cell phone records fall within the proper scope of permissible discovery under the Federal Rules of Civil Procedure and the Court should allow such discovery. Plaintiffs are agreeable to subjecting Magner’s cell phone records and financial documents to provisions of a protective order to protect his privacy and financial security interests.
WHEREFORE, PREMISES CONSIDERED, Plaintiffs pray this Court:
(1)
Overrule Magistrate Nelson’s Order denying discovery of the tax records, banking records and personal cell phone records of Defendant Steve Magner;
(2)
Compel production of Magner’s state and federal tax returns, personal bank records, and personal cell phone records for the years 1999 through 2006, as this information is “reasonably calculated to lead to the discovery of admissible evidence” in support of Plaintiffs’ RICO claims;
(3)
Award reasonable attorney fees and costs in bringing this motion; and
(4)
Order such other and further relief, at law or in equity, to which Plaintiffs may be
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justly entitled.
Respectfully submitted,
SHOEMAKER & SHOEMAKER, P.L.L.C.
Dated: July 30, 2007 By: s/ John R. Shoemaker
John R. Shoemaker (#161561)
Centennial Lakes Office Park
7701 France Avenue South, Suite 200
Edina, Minnesota 55435
(952) 841-6375
Attorneys for Plaintiffs Steinhauser, et. al. Attorneys for Plaintiffs Harrilal, et. al.
THE ENGEL FIRM, PLLC
Dated: July 30, 2007 By: s/ Matthew A. Engel
Matthew A. Engel (#315400)
11282 86th Avenue North
Maple Grove, Minnesota 55369
(763) 416-9088
Attorneys for Plaintiffs Gallagher, et. al.
Case 0:05-cv-01348-JNE-SRN Document 84 Filed 07/30/2007 Page 13 of 13

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Thursday, August 02, 2007

35W Bridge Colapse

Friday, July 27, 2007

Tragedy

St. Paul firefighters assisted each other as they emerged from the sewer after searching for two missing sewer workers late Thursday night. The men are feared drowned after a torrent of rain filled the sewer. The search began Thursday afternoon in the network of pipes, and was to continue today in the Mississippi River.

Wednesday, July 25, 2007

How you can get Involved in local government and make a difference

When local politics is a mess-

We should stop blaming the politicians for things like this and start looking at ourselves.After all this is a democracy and these people didn't land in office magically. We put them there.

We ignore the details and inner workings and pay little attention until seomthing like this creeps up on us.
No it isn't only the people in office who are to blame if your corner library closes...its all of us.We need to take back control of our government and get off our asses and yes you might even have to sit through a boring City Council meeting or actually speak directly with your representatives....but if you don't take action you might as well hand them the keys to your bank account.

Here's how to get involved:

1. CALL your local representative and express your concerns, desires, hopes, dreams.
2. Go to the meetings and learn all you can about the issues.
3. Get to know your neighbors...yep, put down the remote, get off your duff and walk over to say "hello"
4. Organize, organize, organize...whether its around a specific issue or an entire ideology...theres no better measure than taken it to the people.
5. Run for office if your fed up and think you could do a better job.
6. Engage people on the street, the internet, the paper, the TV at church or the park...talk to your fellow citizens.
7. VOTE.
8. Community involvement like a district council or volunteer organization.
9. Keep an open mind and try to be reasonable about your expectations...government does NOT move on a dime.
10. Be polite to your opposition. You often learn more and see why someone is motivated to do what they do.

Martin Owings - Just some thoughts.

Saturday, July 07, 2007

It's TIME !

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