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
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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
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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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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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‘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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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.
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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.
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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
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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
