Sik Gaek, Incorporated v. Marcus Harris , 789 F.3d 797 ( 2015 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 14-1196
SIK GAEK, INCORPORATED,
Plaintiff-Appellant,
v.
MARCUS HARRIS, et al.,
Defendants-Appellees.
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 13 C 6624 — James F. Holderman, Judge.
SUBMITTED APRIL 2, 2015 — DECIDED JUNE 17, 2015
Before BAUER, POSNER, and MANION, Circuit Judges.
BAUER, Circuit Judge. Plaintiff-appellant, Sik Gaek, Incor-
porated, sought sanctions against defendant-appellee, Marcus
Harris, for fees and expenses incurred in connection with
Harris’ failure to attend a deposition in contravention of a
court order. The district court declined to impose sanctions and
2 No. 14-1196
closed the matter. Appellant appeals from that order.1 We
affirm.
I. BACKGROUND
In 2010, appellant filed suit in the United States District
Court for the Eastern District of New York against Daniel Kim
and Yogi’s II, Inc., alleging trademark infringement under the
Latham Act and various state law claims. This discovery
dispute arises out of that pending action.
Marcus Harris, a non-party to the underlying New York
litigation, is a Chicago attorney who filed several trademark
applications for Yogi’s II, Inc. On July 17, 2013, appellant
served Harris with a subpoena issued by the Northern District
of Illinois, requiring his deposition and documents related to
the trademark applications he filed for Yogi’s II, Inc. The
deposition did not take place on July 29, 2013, as scheduled.
On September 16, 2013, appellant filed a motion to enforce
the subpoena. The district court granted the motion at a
hearing on October 22, 2013, and ordered Harris to attend
the deposition and produce the documents at his office at
12:00 p.m. on October 29, 2013. Appellant sent Harris, who was
not present at the October 22 hearing, a copy of the order by
mail and facsimile on October 23, 2013, and faxed a letter to
Harris on October 28, 2013, confirming that the deposition
would take place in accordance with the district court’s order.
1
Appellant also accuses the district court judge of “regionalism,” or
regional bias. This claim is groundless and warrants no further discussion.
No. 14-1196 3
On October 29, 2013, one of the appellant’s attorneys,
Thomas Park, arrived at Harris’ office at 11:45 a.m. to take the
deposition. Harris was not there. Park spoke to Harris over the
phone and, according to Park, Harris stated that he was aware
of the court order and would be willing to do the deposition,
but that it would take him at least one hour or more to arrive
at his office. Park told Harris that if he did not arrive by
1:00 p.m. it would be treated as a “no show.” The deposition
did not take place. Later that evening, Harris faxed a letter to
Park stating, “I have every intention of complying with the
court’s order … . I can be available this week to be deposed
either telephonically or by video. Please propose times that
work with your schedule.” Appellant did not respond to
Harris’ letter or attempt to reschedule. Rather, on October 30,
2013, the next day, appellant filed a motion to hold Harris in
contempt for failing to attend the deposition on October 29,
2013, and seeking sanctions in the form of fees and expenses in
excess of $6,800. Harris filed an affidavit attached to his reply,
which explained that he was on vacation the week of Octo-
ber 22, 2013, celebrating his father’s 70th birthday with his
family in New York City, and that he first became aware of the
district court’s order of October 22, 2013, on October 29, 2013,
at 12:41 p.m., when he spoke with Park on the phone. During
that conversation, Harris claims that he told Park that he
would rush to his office for the deposition, but would not be
able to get there until about 2:00 p.m. According to Harris,
Park refused to take his deposition on October 29 because he
(Park) had to catch a train back to the airport at 1:00 p.m.
Harris then offered to be deposed on the spot via telephone,
but Park refused.
4 No. 14-1196
On November 6, 2013, Harris’ attorney sent a letter to Park
via email, facsimile transmission, regular mail, and certified
mail. The letter stated: “Mr. Harris continues to be available for
deposition, as he has been since he found out about this matter
for the first time on October 29, 2013 … . Please contact me via
email … at your earliest convenience to schedule his deposi-
tion.” On November 8, 2013, Harris’ attorney called Park’s
office in an attempt to reschedule the deposition; a receptionist
informed Harris’ attorney that Park was not available but
would call back on November 11, 2013. When Park failed to
call Harris on November 11, 2013, Harris’ attorney sent Park
another email that was substantially similar to the email sent
November 6. Neither Park nor any other representative of
appellant responded to Harris or his lawyers.
On December 17, 2013, the district court held a hearing on
appellant’s motion for contempt and sanctions. The district
court ordered appellant to take and complete Harris’ deposi-
tion that same day, and appellant did so. The court also
ordered all pending motions, including appellant’s motion for
contempt and fees and expenses, moot. On January 7, 2014,
appellant filed a renewed motion for sanctions in the form of
fees and expenses in excess of $6,800. The district court entered
an order denying appellant’s motion on January 8, 2014, and
closed the matter. This appeal followed.
II. DISCUSSION
The initial inquiry in any appeal is whether the court to
which the appeal has been taken has jurisdiction to entertain
the appeal. Congress has granted the United States Courts of
Appeals jurisdiction over all final decisions of the federal
No. 14-1196 5
district courts. See 28 U.S.C. § 1291. A final decision is one
which ends the litigation on the merits and leaves nothing for
the district court to do but execute the judgment. Midland
Asphalt Corp. v. United States, 489 U.S. 794, 798 (1989). Ordi-
narily, a pretrial discovery order, such as a refusal to impose
discovery-related sanctions, is not final in the sense that it
winds up the underlying lawsuit. Mulay Plastics, Inc. v. Grand
T. W. R. Co., 742 F.2d 369, 370 (7th Cir. 1984). Strictly speaking,
however, the finality rule is not without exceptions.
The federal courts of appeals have recognized that a pretrial
discovery order may constitute a final appealable order when
issued by a district court in an ancillary proceeding, and said
district court is not within the jurisdiction of the circuit court
having appellate jurisdiction to review the final adjudication of
the main action. See Natta v. Zletz, 379 F.2d 615, 618 (7th Cir.
1967); Carter Prods., Inc. v. Eversharp, Inc., 360 F.2d 868, 872 (7th
Cir. 1966); see also Hooker v. Continental Life Ins. Co., 965 F.2d
903, 905 (10th Cir. 1992); Micro Motion, Inc. v. Exac Corp., 876
F.2d 1574, 1576 (Fed. Cir. 1989); In re Grand Jury Proceedings,
etc., 649 F.2d 387, 388 (6th Cir. 1981); Republic Gear Co. v. Borg-
Warner Corp., 381 F.2d 551, 554 (2d Cir. 1967); Horizons Titanium
Corp. v. Norton Co., 290 F.2d 421, 424 (1st Cir. 1961). Here, the
district court order denying sanctions was issued in a jurisdic-
tion not that of the main proceeding. Consequently, appellants
cannot obtain effective review of the order as part of an appeal
of a final adjudication of the main action; the Second Circuit
lacks jurisdiction over both the district court that entered the
order at issue and non-party Harris. Furthermore, this case was
filed in the Northern District of Illinois solely for the purpose
of obtaining discovery from Harris; after that object was
6 No. 14-1196
accomplished, the district court denied appellant’s motion for
sanctions and closed the matter, ending the ancillary litigation.
There is nothing left for the district court to do. Rather, the
only issue remaining is the validity of the district court’s order,
and appellant can only obtain meaningful review of that order
in this court. For these reasons, we hold that this court has
jurisdiction to review the district court’s order.
As for the merits, Federal Rule of Civil Procedure
37(b)(2)(A) grants district courts the power to impose appropri-
ate sanctions for violations of discovery orders. We review
those sanctions only for an abuse of discretion. Domanus v.
Lewicki, 742 F.3d 290, 295 (7th Cir. 2014). We do not find that
the district court abused its discretion here.
Appellant contends that Federal Rule of Civil Procedure
37(b)(2)(C) mandates the assessment of fees and costs in the
circumstances of this case. That Rule states, “the court must
order the disobedient party … to pay reasonable expenses,
including attorney’s fees, caused by the failure, unless the
failure was substantially justified or other circumstances make
an award of expenses unjust.” Fed. R. Civ. P. 37(b)(2)(C)
(emphasis added). The qualifying language of the final clause
makes clear that fees are not mandatory. Harris’ failure to
attend the deposition on October 29, 2013, was an inadvertent
and irreproachable incident. As Harris explained in his
affidavit, he was out of town the week of October 22, 2013, and
was not present at the hearing on October 22, 2013, where the
district court entered the pertinent order, nor did he receive the
letters that appellant mailed and faxed to his office regarding
the order. When Harris first became aware of the court’s order,
he offered to rush to his office to take the deposition as
No. 14-1196 7
scheduled, albeit it a few hours late; appellant, however,
refused to grant him this minor concession. Harris further
offered to conduct the deposition on the spot by telephone, but
appellant refused this offer as well. Thereafter, Harris reached
out to appellant no less than four times, each time informing
appellant that he was available to schedule the deposition at
appellant’s earliest convenience, yet appellant did not respond
to any of Harris’ communications. The district court was
intimately familiar with the parties and the facts and circum-
stances underlying this discovery dispute. The court’s decision
not to impose sanctions for Harris’ inadvertent failure, which
he went out of his way to rectify, did not constitute an abuse of
discretion.
III. CONCLUSION
For these reasons, the district court’s order denying
appellant’s motion for sanctions is AFFIRMED.