Sheppard v . River Valley, et a l . CV-00-111-M 01/22/04 UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Mary Chris Sheppard and Robert Sheppard, Plaintiffs
v. Civil N o . 00-111-M Opinion N o . 2004 DNH 020 River Valley Fitness One L.P. d/b/a River Valley Club, et a l . , Defendants
O R D E R
This case has been settled, but as the parties correctly
point out, an appeal from an earlier order by the Magistrate
Judge imposing discovery sanctions remains unresolved.
Defendants’ counsel, W . E . Whittington, Esq., who was sanctioned,
takes issue with findings made and conclusions drawn by the
Magistrate Judge that were critical of his professional conduct
in this and a related case (that other case was consolidated with
this one for purposes of discovery). Whittington is unwilling to
withdraw the appeal, notwithstanding settlement of the underlying
case, for essentially two reasons. First, he believes the
Magistrate Judge’s findings, and the words used to express those
findings, unjustifiably injure his professional reputation. Second, based upon a preliminary demand he received, Whittington
says that plaintiffs’ counsel are seeking to convert the imposed
sanction (i.e., that Whittington “shall personally compensate the
plaintiffs for their expenses, including reasonable attorney’s
fees, incurred in connection with their opposition to and the
motion for relief from the protective order [that Whittington
obtained]”) into an exorbitant recovery, in excess of $25,000.
Background
To say this litigation has been heated and contentious would
be something of an understatement. This final contest arises
from the settlement of the related case that was consolidated for
discovery purposes with this case, and from representations made
to the court and opposing counsel about that settlement. See
Aubin v . River Valley Fitness One L.P., et a l . , Civil N o . 00-110-
B. An extensive recitation of the litigation’s history would be
tedious and unnecessary to the resolution of the pending appeal.
It is enough to briefly summarize the background facts, and focus
on those discrete facts pertinent to this appeal, as and when
appropriate.
2 M . C . Sheppard, the principal plaintiff here, brought a
Title VII claim against defendants based upon sexual harassment
she allegedly experienced during the course of her employment by
defendants. Robert Aubin, who managed the health club owned by
defendants and at which Sheppard worked, also brought suit,
separately, claiming he was discharged in retaliation for
reporting Sheppard’s harassment complaints. Defendants took the
position, in both cases, that no sexual discrimination,
harassment, or retaliation occurred, and they counterclaimed
against Sheppard and Aubin, generally asserting a civil
conspiracy involving them and others to fabricate the
discrimination claims.
In August of 2000, defendants and Aubin agreed to settle
their dispute. Whittington drafted and sent a letter to Aubin’s
counsel, dated August 1 5 , 2000, in which he outlined the terms of
the settlement. To be sure, the letter begins with a declaration
that it “will summarize our settlement discussions.” Exhibit 2 ,
Document N o . 132. And, it expresses the obligations of the
parties in terms generally used in a proposal (i.e., “Aubin would
agree to,” and “would cooperate,” e t c . ) . But the letter ends
3 with the following comment: “If the above is satisfactory,
please indicate by signing below and returning a copy of this
letter.” Counsel for Aubin reviewed the letter, found it
satisfactory after obtaining minor clarifications, and formally
accepted the proposal, evidenced by her signature on August 1 6 ,
2000.
The record is clear that as of that date, the parties had
entered into a settlement agreement, the terms of which were
clear and easily determined by reference to the letter signed by
both counsel. According to the terms of the agreement, the
settlement was subject to a few conditions subsequent (e.g.,
Aubin was to provide an affidavit disclosing his relevant
knowledge and cooperate in the defense of the case). Had those
conditions not been met, perhaps defendants could rescind the
agreement and declare the settlement null and void. But still,
the parties had settled the case on the terms described as of
August 1 6 , 2000. All that remained was performance of the
obligations described in the August 15th letter; there was
nothing of substance left to negotiate. The settlement may not
have been fully accomplished, but both sides were bound to
4 perform. The provisions of the agreement pertinent to this
appeal are as follows:
1 . Rob Aubin would agree to a stipulated judgment of $50,000 in favor of RVC on the counterclaims. All other claims would be dismissed with prejudice each party to bear his/her/its own costs and attorneys fees, and mutual releases would be exchanged on all of those claims. Of the judgment amount, $100 would be paid in cash after the judgment is entered, in exchange for release and satisfaction of judgment from RVC, and RVC would not seek to collect any other portion of the judgment or costs or fees from Aubin or your firm. This provision would be subject to receiving a net worth statement from Aubin, on oath, showing no assets not protected by the Florida bankruptcy exemptions, which we assume you could provide today or early tomorrow.
2 . Rob Aubin would cooperate with us in providing truthful written and oral testimony leading to a signed affidavit, and any e-mails, based on discussions with us at a mutually agreed time by the end of next week. In addition, Aubin will be available to discuss further facts, and provide truthful affidavits, on a continuing basis until the Sheppard case is resolved. This would cover the following subjects:
(a) His actions/discussions with M.C. Sheppard, and his responses.
(e) Any other truthful information relating to the claims in the case or in Sheppard’s case.
(f) If [defendants] asked him to testify at Sheppard’s trial, he would do so (and
5 [defendants] would pay his airfare and hotel expense in Concord).
The settlement is contingent upon defendants’ satisfaction that Aubin is assisting defendants in good faith to the best of his ability. . . . .
3 . The parties shall maintain absolute confidentiality as to the fact that the judgment will not be paid in full. . . . .
4 . The parties would delay filing the stipulated judgment and other settlement documents with the Court until after getting a ruling on the Brannen and Panzica motions, and defendants receiving their documents and taking their depositions. The parties will jointly inform the Court we’re close to settlement, jointly request it reschedule the status hearing for late September, and tell the Court it would help the parties’ settlement negotiations to get a prompt ruling on the Brannen/Panzica motions, which Aubin will now join.
Letter, dated August 1 5 , 2000, Document 1 3 2 , Exhibit 4 . (emphasis supplied)
Counsel subsequently informed the court (in the Aubin case) that:
The parties advise the Court that they have seriously discussed settlement, that they believe the prospects for settlement are excellent after resolution of the two pending motions [Brannen and Panziak], and that resolution of the motions will be helpful to the settlement process.
Document N o . 1 3 2 , p . 1 1 .
6 The Magistrate Judge accepted the parties’ statement at face
value, and ruled on the pending discovery motions pertaining to
Brannen and Panziak. Based upon representations made by
Panziak’s counsel that he had no materials sought by defendants,
the court denied the Panziak discovery motion as moot. The
Brannen discovery motion was granted, and Brannen thereupon
produced documents and gave a deposition.
If the words used by Whittington are examined with
precision, one might plausibly argue that he did not, literally,
misrepresent pertinent facts to the court. After all, the
parties did “seriously discuss settlement” (in fact they agreed
upon the terms of settlement); they did “believe the prospects
for settlement are excellent after resolution of the two pending
motions” (in fact, the prospects were excellent even if the
motions were not resolved, since an agreement had been reached
and it was not contingent upon resolution of those motions); and
they no doubt did believe that “resolution of the motions will be
helpful to the settlement process” (because the “process” to
which they had already agreed contemplated a check on Aubin’s
7 good faith cooperation by examining the Brannen/Panziak documents
being sought in the pending motions).
But, it is also plain that, at best, the court was led to
perceive something other than the actual state of affairs with
regard to the settlement status of the Aubin case. The parties’
carefully chosen words were capable of conveying (and obviously
did convey to the Magistrate Judge) an impression substantially
broader than that which a literal, minimalist construction of the
words would support. In some quarters that style of
communication is regarded as “quibbling,” and it certainly
qualifies as “sharp practice,” well outside the boundaries of
complete and full candor owed to the court by those who practice
law in this district. At worst, counsel intentionally sought to
mislead the court with regard to the actual settlement status of
the Aubin case in order to obtain rulings on pending motions that
otherwise probably would not have been made.
Satisfied that Aubin had fulfilled his cooperation agreement
(though some obligations, like testifying at a later time,
remained), defendants and Aubin exchanged mutual releases, filed
8 the agreed upon stipulation for judgment (that provided for entry
of judgment in defendants’ favor in the amount of $50,000 on
their counterclaims, but did not mention the contemporaneous
satisfaction of all but $100 of that amount), and formally ended
the litigation brought by Aubin. Whittington then sent a letter
to Sheppard’s counsel, dated October 6, 2000, in which he
disclosed that Aubin’s case had settled and invited settlement
discussions in Sheppard’s case. Whittington wrote:
Attached please find a Stipulation to Judgment signed by Judge Barbadoro on October 4 in the amount of $50,000 in [defendants’] favor in the Aubin case. It is clear that, when presented with the extensive evidence that we have compiled in support of our counterclaims against him and our motion for summary judgment on his own claims, Aubin and his counsel saw that the litigation had only one possible outcome.
Missing from that letter also was any mention of the satisfaction
agreement contemporaneously forgiving $49,900 of the stipulated
judgment amount. Once again, the words used (and not used) by
Whittington seem carefully chosen, and, if dissected and
construed from a minimalist point of view, are defensible as
“literally true.” But, it is likewise plainly apparent that
those words were meant to convey more - i.e., that Aubin had
agreed to pay a substantial judgment - to encourage Sheppard to
9 pay a similar amount to settle her case. It was, in purpose, an
attempted ruse; a clumsy one, but an attempted ruse nevertheless.
Sheppard’s counsel were neither fooled nor intimidated.
Their reaction was predictable and straightforward. They asked
to see the papers related to the Aubin settlement. After some
foot-dragging by Whittington, and failure to respond to discovery
requests to produce the Aubin settlement documents, plaintiff’s
counsel filed a motion to compel production. It was at this
point that the problems began to come to light.
In response to plaintiffs’ motion to compel, Whittington
filed a motion for protective order. Document N o . 6 7 . In it he
made two arguments. First, he argued that the Aubin settlement
documents “[have] no bearing on any of the issues in this case,
and [are] not calculated to lead to admissible evidence.” Id.
Second, he argued that disclosure of the documents would “violate
the contractual confidentiality rights of Robert Aubin” and
“defendants would be damaged by release of the information
generally because it may have bearing on claims of six other
persons who currently are in litigation with [the defendants].”
10 Id. Whittington sought alternative relief: 1 ) that no disclosure
be ordered, o r , 2 ) if disclosure was ordered, that access to the
documents be restricted to Sheppard’s counsel. Significantly,
Whittington also offered, in the motion, “to submit the
document[s] at issue to the Court under seal [for in camera
review], which would demonstrate the lack of any material
relevant to the instant case.”
By margin order, the Magistrate Judge granted the motion in
part and denied it in part. He ordered production of the
settlement documents, but granted some protection by limiting
access to Sheppard’s counsel. Needless to say, Sheppard’s
counsel were unhappy to learn the actual circumstances
surrounding the Aubin settlement, and, after reviewing the
documents, promptly moved for relief from the protective order as
entered as well as for sanctions against Whittington.
The Magistrate Judge was also displeased when he reviewed
the documents in connection with Sheppard’s motion for relief.
He immediately vacated the limited protective order and directed
Whittington to show cause why he should not be sanctioned. See
11 Fed. R. Civ. P. 34(a)(4)(B). A hearing was held and, thereafter,
the Magistrate Judge issued a written order in which he made
findings and imposed sanctions on Whittington. The sanction at
issue here is the Magistrate Judge’s order requiring Whittington
to pay plaintiffs’ reasonable expenses and attorneys’ fees
incurred in objecting to the motion for protective order and in
seeking relief from i t .
Analysis
Motions for sanctions are, generally speaking, treated as
nondispositive. There are exceptions - i f , for example, the
sanction effectively disposes of the case - but none applies
here. Accordingly, the “clearly erroneous” standard of review is
applicable in resolving counsel’s objection to Magistrate Judge
Muirhead’s sanctions order. Applying that deferential standard
of review, the court must accept the Magistrate’s findings of
fact and the conclusions he drew from them, absent reason to
strongly believe that a mistake has been made. Phinney v .
Wentworth douglas Hospital, 199 F.3d 1 (1st Cir. 1999). A
Magistrate Judge’s nondispositive sanctions order can be modified
or set aside by the district court only if it is “found to be
12 clearly erroneous or contrary to law.” Fed. R. Civ. P. 72(a).
This is not a matter in which de novo review is available.
Phinney, supra.
The Magistrate Judge found, essentially, that Whittington’s
motion for protective order relative to the Aubin settlement
documents was filed without justification. The Magistrate
specifically found that Whittington did not have a justifiable
basis upon which to contend, as he did in the motion, that the
Aubin settlement documents were not relevant to or discoverable
in the Sheppard case. The record supports that finding.
Any reasonable attorney would have, and should have
recognized immediately that a settlement agreement in a case
consolidated for discovery with a similar case (that raised
similar claims against identical parties) and that calls for a
settling party to cooperate in defending the related/consolidated
case, and to disclose knowledge pertinent to the subject matter
of the related/consolidated case, and to provide an affidavit for
use i n , and to testify i n , the related/consolidated case,
constitutes relevant evidence in the related case. At a minimum,
13 it is likely to lead to the discovery of additional relevant and
admissible evidence. It is perfectly obvious that such documents
relate directly to the credibility and motive of the settling
party in providing information and testifying about critical
facts in the ongoing litigation. It is equally self-evident that
such documents would directly lead to the discovery of admissible
evidence, e.g., the substantive disclosures made by the settling
party about facts critical to the issues pending in the ongoing
case. This is not a close question.
Whittington had no justifiable basis upon which to argue
that the Aubin settlement documents were irrelevant to the
Sheppard litigation. And, against the backdrop of his less than
candid representations regarding the settlement status of the
Aubin case, the Magistrate Judge could reasonably find that
Whittington filed the motion for protective order knowing that it
was unjustified.
Whittington also based the motion on a claim that Aubin’s
rights of confidentiality might be compromised by disclosure.
The Magistrate Judge implicitly accepted that premise, as
14 demonstrated by his granting the motion for protective order in
part. He limited disclosure and access to the allegedly
confidential documents to opposing counsel. But, as noted, when
opposing counsel saw the documents, the unjustified argument
became clear.
While I may not have drawn the same strong conclusions from
the record as the Magistrate Judge did regarding Whittington’s
purpose and motives, I cannot say he committed clear error in his
substantive ruling - that Whittington is properly subject to
sanctions under Fed. R. Civ. P. 37(a)(4) in the form of
personally paying the reasonable expenses, including attorneys’
fees, incurred by plaintiffs in opposing and seeking relief from
the protective order.
When a motion for protective order is denied o r , as in this
case, vacated, sanctions must be considered. Fed. R. Civ. P.
34(a)(4)(B) provides:
If a motion is denied . . . the court shall, after affording an opportunity to be heard, require the moving party or the attorney filing the motion or both of them to pay to the party or deponent who opposed the motion the reasonable expenses incurred in opposing the
15 motion, including attorneys’ fees, unless the court finds that the making of the motion was substantially justified or that other circumstances make an award of expenses unjust.
See generally Cobell v . Norton, 206 F.R.D. 324 (D.D.C. 2002);
Reiser v . The West Company, 1988 WL35916 (E.D.Pa.); Wilson v .
Olathe Bank, 184 F.R.D. 395 (E.D.Ks. 1999).
Of course, the Magistrate Judge did not find that the
“making of the motion was substantially justified or that the
circumstances make an award of expenses unjust.” Rather, he
affirmatively found that the motion was entirely unjustified, and
the circumstances warranted the imposition of sanctions. The
record supports that conclusion. In that regard, I cannot find
the sanctions order to be either clearly erroneous or contrary to
law. Fed. R. Civ. P. 72(a).
I am not persuaded, however, that the record supports the
Magistrate Judge’s conclusion that Whittington filed the motion
for protective order in an effort (in part) to “conceal his
deceptive conduct in the Aubin case,” by which the Magistrate
meant counsel’s less than fully candid representations to the
16 court regarding the status of the Aubin settlement. Whittington
did, after all, offer to file the Aubin settlement documents with
the court for in camera inspection - hardly the kind of offer
likely to be made by one bent upon concealing his misconduct.
Whittington vigorously denies any such motive, and his actions
generally support his denials, as does the general tenor of the
record. Whittington did not, and seemingly still does not,
appreciate the fact that his representations regarding the Aubin
settlement were improper. He should, but that he does not is
probative of his motives. It is highly unlikely that he was
motivated to file the motion for protective order to conceal
misconduct he did not (and still does not) recognize as
misconduct. To the extent the Magistrate Judge so found, I
hereby overrule that finding on grounds that there is reason to
strongly believe a mistake has been made.
That finding should be of little solace to Whittington,
however, because the record does fully support the Magistrate
Judge’s other findings and conclusions. Whittington engaged in
sharp practice, did not fully meet his obligation of complete
candor to the court, did not meet the high standard of
17 professionalism and civility expected in this state in his
dealings with the court or opposing counsel, and filed an
unjustified motion for protective order. All of which precludes
a finding that “circumstances make an award of expenses unjust”
under Rule 37(a)(4).
Conclusion
The sanctions imposed by the Magistrate Judge are affirmed.
Within thirty (30) days of the date of this order, plaintiffs
shall file a detailed and well-supported request for reasonable
expenses, including attorneys’ fees, incurred in opposing the
motion for protective order and moving for relief from that
order. Attorney Whittington shall be afforded the opportunity to
object within ten (10) days of plaintiffs’ filing, and, if
necessary, a hearing shall be held on the amount Whittington
shall be required to pay. The Magistrate Judge shall determine
the appropriate sanction amount in the event of a dispute,
subject to review in the usual course.
18 SO ORDERED.
Steven J. McAuliffe United States District Judge
January 2 2 , 2004
cc: Lauren S . Irwin, Esq. William E . Whittington, IV, Esq. Joseph F. Daschbach, Esq.