Gary Schubert v. Pfizer, Inc. , 459 F. App'x 568 ( 2012 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 11-1726
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Gary Schubert, *
*
Plaintiff – Appellant, *
* Appeal from the United States
v. * District Court for the
* Southern District of Iowa.
Pfizer, Inc.; Paul Plofchan; Mike *
Lynch, *
* [UNPUBLISHED]
Defendants – Appellees. *
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Submitted: January 9, 2012
Filed: February 1, 2012
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Before MURPHY, BYE, and COLLOTON, Circuit Judges.
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PER CURIAM.
Gary Schubert, a former Pfizer, Inc., pharmaceutical sales representative,
brought suit against Pfizer and his former district managers, Paul Plofchan and Mike
Lynch (collectively, “Pfizer”), alleging age discrimination, harassment, and
retaliation. The district court1 dismissed Schubert’s case as a sanction for repeated
discovery violations. On appeal, Schubert contends the district court clearly erred in
finding he wilfully violated court orders compelling discovery, and abused its
1
The Honorable Robert W. Pratt, United States District Judge for the Southern
District of Iowa.
discretion by dismissing his case with prejudice and adopting the magistrate judge’s2
recommendation Schubert pay Pfizer $53,255.55 in fees and costs. We affirm.
I
Initial discovery disputes came to a head in February 2010, ten months after
Schubert initially filed his complaint, when Pfizer filed a motion to compel.
Specifically, Pfizer requested complete answers to a number of interrogatories and
production of several documents. Pfizer requested Schubert’s tax returns and the
identity of his medical providers, among other things, to assess Schubert’s claim of
lost wages and medical and emotional distress damages. The magistrate judge
granted Pfizer’s motion on March 12, 2010, and ordered compliance by April 5, 2010.
Schubert failed to respond in a timely and meaningful way.
On April 9, 2010, Pfizer filed its first Motion for the Sanction of Dismissal, in
which it summarized Schubert’s failures to provide discovery and to comply with the
March 12 order. On May 10, 2010, the magistrate judge held a telephonic hearing,
and, although it did not grant Pfizer’s first motion to dismiss, it admonished Schubert
for his numerous violations, and ordered him, among other things, to supplement his
deficient answers to interrogatories relating to his financial activities, his efforts to
mitigate damages, his medical providers, and to produce documents relating to his
taxes, calendars, business entities, etc. The magistrate judge set a short deadline for
compliance: May 14, 2010. Again, Schubert failed to fully comply.
On May 20, 2010, the magistrate judge held another discovery hearing, lasting
3 hours and consuming 120 pages of transcript. The magistrate judge ordered full
production of Schubert’s tax returns and all relevant tax materials for 2005, 2009, and
2
The Honorable Celeste F. Bremer, United States Magistrate Judge for the
Southern District of Iowa.
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2010, the years for which Schubert had so far failed to produce any information. The
magistrate judge gave Schubert until June 1, 2010, and emphasized the importance
of her order: “I don’t want to get to June 1st and have people say, okay, ‘Now I just
need another month,’ because we’ve horsed around on this for quite a while. So I
will put June 1st, but I’m going to hold you to June 1st[.]” Hr’g Tr. at 30, May 20,
2010. On June 4, 2010, the magistrate judge issued an order memorializing her
rulings from the May 20, 2010, conference. In her order, the magistrate judge
chastised Schubert and his counsel for their failures to comply with court orders and
the Rules of Civil Procedure, sanctioned Schubert $3,000 for Pfizer’s costs and fees
associated with his noncompliance, and ordered the parties to secure local counsel to
participate in all significant discovery events and conferences. The magistrate judge
then warned Schubert about the possibility of additional sanctions if his misconduct
continued:
It is apparent that Plaintiff’s counsel is not fluent in the Federal Rules
of Civil Procedure, and that Plaintiff or his counsel have not completed
production of documents in a prompt fashion. The ongoing delay and
confusion in the completion of discovery has got to stop. Whether the
delay has been caused by Plaintiff’s counsel, or Plaintiff himself, they
are both advised that further unnecessary delay, or any obstruction of the
discovery process, will result in the imposition of sanctions, which can
include dismissal of the action. See Fed. R. Civ. P. 37(d).
Order Denying Mot. to Dismiss at 9, June 4, 2010. Again, Schubert failed to fully
comply.
On July 7, 2010, the magistrate judge held another discovery hearing. During
the hearing, the magistrate judge learned, among other things, Schubert (1) had yet
to produce any documents relating to his financial activities for 2009 or 2010; (2) had
yet to produce any organizational or financial documents relating to five businesses
he was involved with—and that Schubert was not planning to meet with his tax
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preparer regarding these companies until August 2010 due to Schubert’s own travel
schedule; (3) Schubert had destroyed evidence; and (4) had not meaningfully
supplemented or amended his interrogatory responses. Regarding Schubert’s failure
to produce financial documents, the magistrate judge stated:
So where is Mr. Schubert’s sense of urgency of being in compliance
with my order to get that information by June 1st if he doesn’t have an
appointment until August?
....
I’m speechless. I mean, I cannot comprehend how Mr. Schubert is
demonstrating good faith in complying with his obligations to provide
discovery in this case. I mean, from the description of the material that
was just provided today, best case it’s incomplete, and worst case it’s
flat-out ignoring my order, and I tried to anticipate the argument of
incompletion in my order. So I’m not hearing any good cause for the
material to be incomplete.
Hr’g Tr. at 16-17, July 7, 2010. Regarding Schubert’s discovery responses in general,
the magistrate judge stated:
[E]very step Plaintiff has taken has resulted in delay of discovery, and
every morsel of information that’s been dribbled out has just been one
piece of this jigsaw puzzle as opposed to giving Defendants the whole
box with all the pieces in it.
So I [am] having to parse through answers, plus supplemental material,
plus something as basic as ‘What's your medical history,’ and still be
flogging those questions six months into this year is inefficient and is
incredibly expensive.
....
I don’t know what else I can do in terms of discovery management. I tell
you to produce something, I give you a deadline, and it never happens,
so I get little parts of things, and it still doesn’t come out to be a full set
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of discovery. The case has been on file for over a year, and we’re
working Plaintiff’s damages issues, and it’s still—there’s nothing that’s
gelled or come together in terms of that, and that’s assuming that there’s
really nothing controversial about the damage claims, but just from this
description of them it seems to me that it is controversial.
Id. at 41-42. At the conclusion of the hearing, the magistrate judge invited Pfizer to
re-file its April 2010 Motion for the Sanction of Dismissal. Id. at 49-50.
On July 16, 2010, Pfizer filed its Renewed Motion for the Sanction of
Dismissal. On July 30, 2010, Schubert finally produced several hundred pages of
documents to Pfizer, though it appears his production was still inadequate. The
magistrate judge conducted another discovery hearing on August 3, 2010, and issued
her Report and Recommendation on September 10, 2010: “In light of [Schubert’s]
willful violations of Orders, previously sanctioned misconduct, his ongoing failure
to engage fully in the discovery process, and lack of compliance with the Federal
Rules of Civil Procedure,” the magistrate judge recommended Schubert’s lawsuit be
dismissed with prejudice and Pfizer be awarded its reasonable costs and fees incurred
as a result of Schubert’s conduct. Order and Report and Recommendation at 6-7,
Sept. 10, 2010. Pursuant to Federal Rule of Civil Procedure 37(b)(2)(C) and 16(f)(2),
and after considering Pfizer’s subsequent Statement of Costs and Fees and Schubert’s
objections, the magistrate judge assessed those fees and costs to be $53,255.55 in a
December 17, 2010, order. The order explained that “[a]ny appeal of [the costs and
fees] will be considered with the Objections to the Report and Recommendation for
Sanctions.” Order on Fees and Costs at 5, Dec. 17, 2010.
Schubert filed objections to the magistrate judge’s Report and
Recommendation on October 20, 2010, in which he requested a hearing in front of
the district court. In those objections, Schubert did not make any reference to the
magistrate judge’s recommendation he “pay Defendants the amount of their fees and
costs involved in bringing the renewed Motion for Sanctions.” Order and Report and
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Recommendation at 7, Sept. 10, 2010. Although Schubert’s reply in support of his
objections did request “the opportunity to be heard” on the issue of fees and costs,
Reply to Def.’s Resp. to Pl.’s Objections at 4, Dec. 3, 2010, Schubert did not state any
specific objection. In addition, Schubert never filed an objection to the magistrate
judge’s Dec. 17, 2010 Order on Fees and Costs in which the magistrate judge
awarded Pfizer $53,255.55.
The district court granted Schubert a hearing to discuss his objections, which
it conducted on February 22, 2011. During the hearing, Schubert’s counsel did not
raise the issue of costs and fees. The district court then issued an order on February
28, 2011, finding “evidence of multiple violations of multiple orders, a pattern of
conduct demonstrating willfulness, and prejudice to the Defendants.” Order Granting
Mot. to Dismiss at 9, Feb. 28, 2011. Furthermore, the district court stated it was “not
convinced that a less severe sanction could remedy the effect of Schubert’s
transgression, or that, if the court denies Defendants’ motion, Schubert’s litigation
conduct is likely to significantly improve.” Id. (internal quotation marks and citation
omitted). The district court adopted the magistrate judge’s Report and
Recommendation in its entirety, and dismissed Schubert’s case with prejudice. Id.
II
On appeal, Schubert argues the district court abused its discretion by granting
Pfizer’s Motion for the Sanction of Dismissal, and awarding Pfizer reasonable fees
and costs associated with Schubert’s discovery violations.
A. Dismissal With Prejudice
Under Federal Rule of Civil Procedure 37(b)(2)(A), the district court may
impose sanctions for discovery violations, including dismissal of the action in whole
or in part. Because dismissal is an extreme result, we have allowed dismissal to “be
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considered as a sanction only if there is: (1) an order compelling discovery; (2) a
willful violation of that order; and (3) prejudice to the other party.” Keefer v.
Provident Life and Acc. Ins. Co., 238 F.3d 937, 940 (8th Cir. 2000) (citing Schoffstall
v. Henderson, 223 F.3d 818, 823 (8th Cir. 2000)). We review a district court’s
imposition of such sanctions for abuse of discretion, id., and “more closely scrutinize
dismissal imposed as a discovery sanction because the opportunity to be heard is a
litigant’s most precious right and should sparingly be denied.” Id. at 940-41 (internal
quotation marks and citation omitted). We will review any factual findings made by
the district court, including its “determination that appellant wilfully disregarded
court orders[,]” for clear error. Rodgers v. Curators of Univ. of Mo., 135 F.3d 1216,
1219 (8th Cir. 1998); see also Avionic Co. v. Gen. Dynamics Corp., 957 F.2d 555,
558 (8th Cir. 1992) (reviewing the district court’s finding the party acted with willful
disobedience for clear error). “[A] finding is clearly erroneous only when, even
though there is evidence in the record to support it, the reviewing court is left with
a definite and firm conviction that a mistake has been committed.” Rodgers, 135 F.3d
at 1220 (internal quotation marks and citation omitted).
After reviewing the record as a whole, we conclude the district court did not
clearly err in finding Schubert’s violations of court orders willful; particularly,
Schubert’s failure to produce all relevant tax returns and his destruction of evidence.
See id. (holding the district court did not err in concluding appellant willfully failed
to produce financial documents); Keefer, 238 F.3d at 941 (refusing to second-guess
the district court’s credibility determination the appellant had willfully destroyed
calendar entries in violation of basic discovery obligations).
Furthermore, the record supports the district court’s conclusion Schubert’s
actions prejudiced Pfizer by preventing it from accurately assessing Schubert’s
claims. See Avionic, 957 F.2d at 559 (“In the context of [Fed. R. Civ. P.] 37(b)(2)
motions ‘prejudice’ exists if the failure to make discovery impairs the opponent’s
ability to determine the factual merits of the party’s claim.”); see also Schoffstall, 223
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F.3d at 824 (concluding prejudice existed where plaintiff’s misconduct forced
defendants to spend significant amount of time “hounding” plaintiff for discovery
instead of defending their case and preparing for trial).
Having found no clear error in the district court’s factual findings, we next turn
to whether the court abused its discretion in dismissing Schubert’s case with
prejudice. Here, the district court not only found Schubert to have willfully violated
court orders, but also noted its concern over the “combined impact of Schubert’s
violations” and the “clear pattern of discovery malfeasance demonstrated by Schubert
in this case.” Order Granting Mot. to Dismiss at 6, Feb. 28, 2011. In addition, the
court properly distinguished this case from Sentis Grp., Inc., Coral Grp. Inc. v. Shell
Oil Co., 559 F.3d 888 (8th Cir. 2009), which Schubert again attempts to analogize to
on appeal. In Sentis, we reversed the district court’s sanction of dismissal with
prejudice, concluding such an order was an abuse of discretion when the evidence
only clearly supported one minor, technical violation—a violation neither willful nor
prejudicial. 559 F.3d at 903-04. The facts in Sentis are in sharp contrast with the
pattern of violations present in this case. Furthermore, the district court already
considered Schubert’s argument his violations were simply the result of
inexperienced counsel doing the best he could in the face of a “well-oiled discovery
machine” exploiting his every mistake. Appellant’s Reply Br. at 4; Pl.’s Obj. to
Mag.’s Order and Rpt. and Recom. at 13, Oct. 20, 2010. In light of the district court’s
findings discussed above, and upon our own careful review, we conclude the record
supports the district court’s conclusion a less severe sanction would not remedy
Schubert’s discovery violations. Therefore, the court’s decision to dismiss with
prejudice was not an abuse of discretion. See Martin v. DaimlerChrysler Corp., 251
F.3d 691, 693-96 (8th Cir. 2001) (affirming dismissal where plaintiff committed
several discovery violations, including failing to disclose numerous lawsuits to which
she had been a party and failing to disclose the identity of certain health care
providers); Keefer, 238 F.3d at 941 (affirming dismissal where plaintiff destroyed
calendar entries, thereby prejudicing defendants). Cf. Arnold v. ADT Sec. Servs.,
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Inc., 627 F.3d 716, 722-23 (8th Cir. 2010) (affirming dismissal under Rule 41(b)
where district court “provided plaintiffs with numerous opportunities to comply with
its discovery orders[, i]t attempted to address plaintiffs’ conduct through less severe
sanctions[,] and warned plaintiffs of the possibility of dismissal.”); Rodgers, 135 F.3d
at 1218, 1221-22 (affirming dismissal under Rule 41(b) where plaintiff intentionally
delayed discovery and produced financial documents at the “eleventh-hour [in an
attempt] to cure his violation of a discovery order”).
B. Assessment of Fees and Costs
Federal Rule of Civil Procedure 37(b)(2)(C) requires the court to “order the
disobedient party . . . to pay the 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.” In addition, Rule 16(f)(2),
governing Pretrial Conferences, Scheduling and Management, imposes similar
obligations on the court regarding the payment of “reasonable expenses—including
attorney’s fees—incurred because of any noncompliance with this rule[.]” “We
review an award of sanctions pursuant to Rule 37(b) under the abuse of discretion
standard.” Comiskey v. JFTJ Corp., 989 F.2d 1007, 1012 (8th Cir. 1993). We
similarly review sanctions assessed under Rule 16(f) for an abuse of discretion.
Gundacker v. Unisys Corp., 151 F.3d 842, 849 (8th Cir. 1998).
Schubert argues the district court failed to conduct a de novo review of the
magistrate judge’s award of costs and fees to Pfizer. Alternatively, Schubert argues
since the district court failed to discuss at all the issue of costs and fees at the
February 22, 2011, hearing, or in its February 28, 2011, order, it therefore must have
rejected it.
First, it is at best questionable whether Shubert properly objected to the
magistrate judge’s recommendation to award Pfizer costs and fees. Although Shubert
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requested an opportunity to be heard on the issue of costs and fees in his Reply to the
Defendant’s Response to Plaintiff’s Objections on December 3, 2010, he never
specifically objected to the December 17, 2010, order valuing the costs and fees at
$53,255.55, nor did he raise the issue in front of the district court during the February
22, 2011, hearing. Under these facts, we find it difficult to conclude the district court
was required to conduct a de novo review on the issue of costs and fees. See 28
U.S.C. § 636 (stating “A judge of the court shall make a de novo determination of
those portions of the report or specified proposed findings or recommendations to
which objection is made.”) (emphasis added); but see Belk v. Purkett, 15 F.3d 803,
815 (8th Cir. 1994) (emphasizing the importance of de novo review by the district
court).
Yet, even if we were to conclude Schubert’s request to be heard on the issue
of fees and costs was sufficient to require the district court to conduct a de novo
review, we cannot conclude the court failed to consider Schubert’s objection simply
because the district court did not specifically refer to the magistrate judge’s
determination of the appropriate monetary sanction. See United States v. Hamell, 931
F.2d 466, 468 (8th Cir. 1991) (“[I]n the absence of any evidence to the contrary, we
presume that the [de novo] review was done properly and affirm the district court’s
approval of the magistrate’s recommendation.”).
Moreover, in this case there is evidence the district court did in fact consider
the issue of costs and fees. The district court specifically stated it had carefully
reviewed “the parties’ original submissions on both motions to dismiss, the parties’
additional submission made after issuance of the Report, the transcript of the oral
argument hearing on Defendants’ renewed motion to dismiss . . . and the parties’ oral
arguments at the February 22, 2011 hearing.” Order Granting Mot. to Dismiss at 6,
Feb. 28, 2011 (emphasis added). After explaining what it had reviewed, the district
court stated it “adopt[ed] the Report in whole.” Id. Accordingly, we reject
Schubert’s argument the district court improperly failed to conduct a de novo review.
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We also reject Schubert’s contention that by failing to specifically mention
costs and fees either at the hearing or in its order the district court implicitly rejected
the magistrate judge’s recommendation on that issue. Such a conclusion conflicts
with the district court’s order stating it “adopts Judge Bremer’ [sic] Report and
Recommendation (Clerks’ No. 92) in its Entirety.” Order Granting Mot. to Dismiss
at 9, Feb. 28, 2011. (emphasis added). See, e.g., United States v. Alston, 626 F.3d
397, 400 (8th Cir. 2010) (noting that when “the district court adopt[s] the magistrate
judge’s report and recommendation in its entirety, we hereafter refer to the findings
and conclusions of the report and recommendation as those of the district court.”).
Having concluded Schubert was afforded the proper review by the district
court, and that the district court adopted the magistrate judge’s recommendation to
award costs and fees to Pfizer, we must next ask if the court abused its discretion in
awarding Pfizer the sum of $53,255.55 in costs and fees “for the period May 20
through September 30, 2010, relating to the additional extraordinary discovery
expense caused by Plaintiff’s noncompliance with discovery orders and Federal Rules
of Civil Procedure.” Order on Fees and Costs, 2, December 17, 2010. We conclude
it did not.
“We are especially reluctant to substitute our judgment for that of the district
court in the matter of appropriate attorney’s fees, because the district court is in the
best position to determine whether hours were reasonably expended and whether an
attorney’s hourly rates are reasonable[.]” Arnold, 627 F.3d at 720 (internal quotation
marks and citation omitted). In this case, the court properly considered only the
amount of fees and costs associated with Schubert’s failure to comply with court
orders and Rule 16, and found Pfizer’s account of hours spent and hourly rates
reasonable. In fact, the court decreased the amount Pfizer originally requested by
over $11,000 to specifically limit the award to extra work performed by Pfizer due
to Schubert’s misconduct during the appropriate time frame. Order on Fees and Costs
at 4-5, Dec. 17, 2010. The sum awarded Pfizer, while significant, was within the
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court’s discretion and is supported by the record. See Comiskey, 989 F.2d at 1012
(noting Rule 37 “authorizes an award encompassing all expenses, whenever incurred,
that would not have been sustained had the opponent conducted itself properly[,]” and
upholding an award of $6,407.50 in costs and fees) (internal quotation marks and
citation omitted); First Am. State Bank v. Cont’l Ins. Co., 897 F.2d 319, 329 (8th Cir.
1990) (upholding a monetary sanction of $2,191.64 under Rule 37(b) because counsel
“unjustified[ly] and willfully delayed non-compliance with certain pretrial discovery
orders” and because the record was “replete with egregious discovery abuse.”)
III
Accordingly, we affirm the district court’s dismissal with prejudice and the
court’s assessment of costs and fees against Schubert in the amount of $53,255.55.
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