United States v. Maverick Mktg., LLC , 2020 CIT 17 ( 2020 )

Slip Op. 20-17
UNITED STATES COURT OF INTERNATIONAL TRADE
UNITED STATES,
Plaintiff,
v.
Before: Claire R. Kelly, Judge
MAVERICK MARKETING, LLC ET AL.,
Consol. Court No. 17-00174
Defendants and Consolidated
Defendants.
MEMORANDUM AND ORDER
[Granting in part and denying in part Defendants’ motions to compel discovery and
consider sanctions.]
Dated: February 7, 2020
Stephen Carl Tosini, Senior Trial Counsel, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, of Washington, DC, for plaintiff United States. With him on
the brief were Joseph H. Hunt, Acting Assistant Attorney General, Jeanne E. Davidson,
Director, and Claudia Burke, Assistant Director.
Barry Marc Boren, Law Offices of Barry Boren, of Miami, FL, and Gerson M. Joseph,
Gerson M. Joseph, P.A., of Weston, FL, for defendants Maverick Marketing, LLC and
Good Times USA, LLC.
Rhonda A. Anderson, Rhonda A. Anderson, P.A., of Coral Gables, FL, for defendant
Gateway Import Management, Inc.
Kelly, Judge: Before the court are motions to compel discovery, see [Defs.’
Maverick Marketing, LLC & Good Times USA, LLC’s] Mot. Order Compelling Disc. &
Consideration Sanctions, Sept. 26, 2019, ECF No. 67 (“Maverick’s Mot.”); [Defs.’
Gateway Import Management, Inc. & Good Times USA, LLC’s] Mot. Order Compelling
Disc. & Consideration Sanctions, Sept. 26, 2019, ECF No. 66 (from associated docket
Consol. Court No. 17-00174 Page 2
Ct. No. 17-00232) (“Gateway’s Mot.”) (collectively, “motion to compel”), filed pursuant to
United States Court of International Trade (“USCIT”) Rule 37(a)(2). 1 Defendants
Gateway Import Management, Inc. (“Gateway”), Good Times USA, LLC (“Good Times”),
and Maverick Marketing, LLC (“Maverick”) contend that the United States (“Plaintiff”) has
inadequately responded to Defendants’ requests for production (“RFPs”) and
interrogatories, and ask the court to enter an order compelling Plaintiff to “provid[e]
meaningful answers to the questions asked and specifically identify[] the documents
referred to in their responses[.]” See Gateway’s Mot. at 15; Maverick’s Mot. at 17.
Defendants also request that this court enter sanctions against Plaintiff for its alleged
failure to respond to requested discovery. Gateway’s Mot. at 1; Maverick’s Mot. at 1.
Plaintiff counters that Defendants’ motion to compel is “unwarranted” and requests the
court to deny the motion. See Pl.’s Opp’n Defs.’ Mots. Compel. at 1, Oct. 11, 2019, ECF
No. 69 (“Pl.’s Opp’n Br.”).
For the following reasons, this court grants Defendants’ motion to compel with
respect to the following RFPs and Interrogatories: Maverick RFP Nos. 4, 10, 11, 12, 13,
14, 15, 16, 19, 20, 22, 24, 26, 27, 28, 29; Maverick Interrogatory Nos. 8, 9, 11, 19, 24;
Gateway RFP Nos. 4, 5, 11, 12, 13, 14, 15, 16, 17, 19, 20, 22, 24, 27, 28, 29, 30; Gateway
Interrogatory Nos. 8, 9, 11, 19, 24; Good Times RFP Nos. 1, 3, 9, 10, 13, 23; Good Times
Interrogatory No. 19. However, Defendants’ motion to compel is denied with respect to
1
Defendants Maverick and Good Times moved to compel discovery in the lead docket of this
consolidated action. See Maverick’s Mot. In addition, Defendants Gateway and Good Times filed
a motion to compel discovery in the associated docket of Court No. 17-00232 but not in the lead
docket. See Gateway’s Mot. The court considers the motions to compel together.
Consol. Court No. 17-00174 Page 3
the following RFPs and Interrogatories: Maverick RFP Nos. 9, 21, 25, 30, 31, 32, 33, 38,
39; Maverick Interrogatory Nos. 15, 20, 21, 25; Gateway RFP Nos. 10, 21, 26, 31, 32, 33,
34, 39, 40; Gateway Interrogatory Nos. 15, 20, 21, 25; Good Times RFP Nos. 4, 5, 6, 7,
8, 11, 15, 17, 18, 19, 20, 21; and, Good Times Interrogatory Nos. 7, 9, 10, 22, 23.
Finally, this court declines to consider sanctions against Plaintiff, at this juncture,
for an alleged failure to comply with Defendants’ motion to compel.
BACKGROUND
Plaintiff commenced separate actions pursuant to section 592 of the Tariff Act of
1930, as amended 19 U.S.C. § 1592(d) (2012), 2 which were later consolidated. See Am.
Summons, Aug. 3, 2017, ECF No. 8; Compl., July 10, 2017, ECF No. 2; Order, Sept. 12,
2019, ECF No. 66 (consolidating Ct. Nos. 17-00174, 17-00232, 19-00004, and 19-00019
under Ct. No. 17-00174). Plaintiff seeks to recover unpaid Federal Excise Tax (“FET”),
with respect to entries of cigars made between July 10, 2012 and March 27, 2015 and
alleges Defendants’ FET calculations were not, as statutorily required, based on arm’s-
length transactions. See Compl. at ¶¶ 1, 21–33; see also Pl.’s Opp’n Br. at 1.
Defendants raise several affirmative defenses. Relevant here, Maverick, Good
Times, and Gateway, argue that they were not negligent “because they received and
reasonably relied on professional advice from their customs house broker and an
2
Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions of Title 19
of the U.S. Code, 2012 edition.
Consol. Court No. 17-00174 Page 4
experience trade attorney” and fully complied with applicable statutes and regulations. 3
See Defs. [Maverick] & [Good Times’s] Answers to Compl. at Third Affirm. Defense, Mar.
29, 2018, ECF No. 48 (“Maverick & Good Times’s Answer); Def. [Gateway’s] Answer to
Compl. at Third Affirm. Defense, Aug. 1, 2018, ECF No. 49 (“Gateway’s Answer”) (from
associated docket Ct. No. 17-00232). 4 Defendants also argue that they “were not
negligent” because “Plaintiff had established a uniform practice” of allowing the same
behavior complained of in this case. See id. at Fifth Affirm. Defense.
On March 12, 2019, Defendants served their respective interrogatories on Plaintiff.
See Gateway’s Mot. at Exs. C–D; Maverick’s Mot. at Exs. C–D. Thereafter, on April 4,
2019, Defendants served their respective RFPs on Plaintiff. Gateway’s Mot. at Exs. A–
B; Maverick’s Mot. at Exs. A–B. On April 12, 2019, Plaintiff responded to Defendants’
3
In their First and Second Affirmative Defenses, Defendants allege that 26 C.F.R.
§ 48.4216(b)(2)(e) (2012), which Plaintiff references in its complaint, see Compl. at ¶ 10, is “void
for ambiguity,” facially and as applied. See Defs. [Maverick] & [Good Times’s] Answer to Compl.
at First & Second Affirm. Defenses, Mar. 29, 2018, ECF No. 48 (“Maverick & Good Times’s
Answer”), Def. [Good Times’s] Answer to Compl. at First & Second Affirm. Defenses, Aug. 1,
2018, ECF No. 48 (from associated docket Ct. No. 17-00232) (“Good Times’s Answer”);
Gateway’s Answer at First & Second Affirm. Defenses (collectively, “Defendants’ Answers”). That
regulation defines sales at arm’s-length. See 26 C.F.R. § 48.4216(b)(2)(e). Good Times also
avers that 26 C.F.R. § 48.4216(b)(2)(e) does not apply to any of its transactions. Good Times’s
Answer at First & Second Affirm. Defenses.
In their Fourth, Sixth, and Seventh Affirmative Defenses, Defendants aver they were not
liable for failing to disclose any alleged “special arrangement” because: they provided all required
information to Customs and Border Protection, see Defendants’ Answers at Fourth Affirm.
Defense; the sales between Maverick and Good Times were not made pursuant to a “special
arrangement” because the parties stood in adverse economic positions, see id. at Sixth Affirm.
Defense; and, Maverick and Good Times were not related parties but an independent contractor
and buyer, respectively. See id. at Seventh Affirm. Defense.
4
Good Times separately avers that it was not negligent with respect to any allegedly false
statements made to Customs, because it was not the importer and thus did not communicate with
Customs, both generally and regarding these entries, and was under no obligation to do so. See
Good Times’s Answer at Third Affirm. Defense.
Consol. Court No. 17-00174 Page 5
interrogatories; following an agreed extension of time, Plaintiff replied to Defendants’
RFPs on June 7, 2019. Gateway’s Mot. at Exs. E–H; Maverick’s Mot. at Exs. E–H. On
June 27, 2019, Defendants notified Plaintiff of their objections to Plaintiff’s RFP and
interrogatory responses. Gateway’s Mot. at Exs. I–L; Maverick’s Mot. at Exs. I–L. Plaintiff
responded to Defendants’ objections on July 10, 2019 and supplemented its responses.
Gateway’s Mot. at Exs. M–N; Maverick’s Mot. at Exs. M–N.
This court conferenced with the parties twice in an effort to resolve their dispute.
See Teleconference, Oct. 18, 2019, ECF No. 72; Memo. & Order, Nov. 1, 2019, ECF No.
73; Teleconference, Jan. 24, 2020, ECF No. 83; Order, Jan. 24, 2020, ECF No. 85.
Unfortunately, a significant number of items remain in dispute. See Defs.’ Discovery
Status Report, Feb. 3, 2020, ECF No. 89. 5
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to 28 U.S.C. § 1582. See United States v.
Maverick Mktg., LLC, 42 CIT __, __, 322 F. Supp. 3d 1373, 1379 (2018) (holding that the
court possesses subject-matter jurisdiction in this case) (“Maverick I”); see also United
States v. Gateway Imp. Mgmt., 42 CIT __, 324 F. Supp. 3d 1328 (2018). This court has
broad discretion in deciding discovery matters. See United States v. Greenlight Organic,
Inc., 41 CIT __, __, 280 F. Supp. 3d 1367, 1378 (2017). USCIT Rule 26(b)(1) permits
5
Defendants jointly filed their respective discovery status reports. Given that the discovery status
reports itemize, and excerpt, only the interrogatories and RFPs that remain in dispute, this opinion
refers to those status reports, rather than the exhibits containing, inter alia, the RFPs,
Interrogatories, and Responses appended to Defendants’ motions to compel. See Discovery
Status Report of Def. [Good Times] in the Maverick and Gateway Cases, Feb. 3, 2020, ECF No.
89-1 (“Good Times Status Report”); Discovery Status Report of Def. [Maverick], Feb. 3, 2020,
ECF No. 89-2 (“Maverick Status Report”); Amend. Status Report of Def. [Gateway], Feb. 4, 2020,
ECF No. 90 (“Gateway Status Report”).
Consol. Court No. 17-00174 Page 6
“discovery regarding any nonprivileged matter that is relevant to any party’s claim or
defense and proportional to the needs of the case, considering the importance of the
issues at stake in the action, the amount in controversy, the parties’ relative access to
relevant information, the parties’ resources, the importance of discovery in resolving the
issues, and whether the burden or expense of the discovery outweighs its likely benefit.”
USCIT R. 26(b)(1). Information within the scope of discovery need not be admissible in
evidence to be discoverable. Id. “Evidence is relevant if: (a) it has any tendency to make
a fact more or less probable than it would be without the evidence; and (b) the fact is of
consequence in determining the action.” Fed. R. Evid. 401.
DISCUSSION
I. Discovery of Trademark and Audit Information Concerning Nonparties
Defendants requested every document or record “which identifies all the
trademarks on the cigars manufactured by [various commercial entities] that were
imported by [various importers.]” Maverick Status Report at Maverick RFP Nos. 30–33;
Gateway Status Repot at Gateway RFP Nos. 31–34. 6 Defendants contend that the
requested trademark information is relevant because it supports Defendants’ affirmative
defenses, against Plaintiff’s penalty action under 19 U.S.C. § 1592(a), which provides
that no person may, by negligence, introduce or attempt to introduce any merchandise
6
Defendants requested information that identifies: “all the trademarks on cigars manufactured by
Swedish Match Dominicana that were imported by Family Tobacco”; “all the trademarks on the
cigars manufactured by Swisher Dominicana that were imported by Family Tobacco Traders”; “all
the trademarks on large cigars imported by All American Tobacco where the trademarks were not
owned or registered by All-American Tobacco”; and, “all the trademarks on large cigars imported
by Family Tobacco Traders where the trademarks were not owned or registered by Family
Tobacco Traders.” Maverick Status Report at Maverick RFP Nos. 30–33; Gateway Status Repot
at Gateway RFP Nos. 31–34
Consol. Court No. 17-00174 Page 7
into the commerce of the United States by a material and false statement or omission.
Maverick’s Mot. at 8; Gateway’s Mot. at 7; see also United States v. Ford Motor Co., 463
F.3d 1267, 1279 (Fed. Cir. 2006) (To establish a violation of section 1592(a), “Customs
has the burden merely to show that a materially false statement . . . occurred; once it has
done so, the defendant must affirmatively demonstrate that it exercised reasonable care
under the circumstances.”). Defendants contend that their requests are proper because
they tend to show that Defendants acted in reasonable belief that the goods were properly
entered, and the FETs were appropriately calculated. See Maverick’s Mot. at 12;
Gateway’s Mot. at 11. To this end, Defendants specifically allege that (1) Customs and
Border Protection (“Customs”) had an established and uniform practice (“EUP”) of
allowing what Defendants did here, and (2) that Defendants exercised reasonable care.
See Maverick’s Mot. at 8, 12; Gateway’s Mot. at 7, 11; see also Compl. at ¶ 20; Maverick
& Good Times’s Answer at Third & Fifth Affirm. Defenses; Gateway’s Answer at Third &
Fifth Affirm. Defenses. 7 Plaintiff objects to each request, averring that the requested
information is “irrelevant [and private] information regarding unrelated taxpayers” that
would be “overly burdensome [to produce] pursuant to USCIT R. 26(b)(1).” 8 See
Maverick Status Report at Maverick RFP Nos. 30–33; Gateway Status Report at Gateway
7
The Third and Fifth Affirmative Defenses relate to whether Defendants acted reasonably. As
noted above, they concern, respectively, Defendants’ receipt and reliance on professional advice
and Plaintiff’s allegedly established and uniform practice of allowing the same behavior. See
Maverick & Good Times’s Answer at Third & Fifth Affirm. Defenses; Gateway’s Answer at Third
& Fifth Affirm. Defenses.
8
Further, Plaintiff avers that is prohibited from producing third-party tax information by statute,
absent a waiver from each taxpayer. See, e.g., Maverick Status Report at Maverick RFP Nos.
30–33. Given that RFP Nos. 30–33 request irrelevant information, the court does not address
whether Plaintiff is proscribed from disclosing third-party tax information in discovery.
Consol. Court No. 17-00174 Page 8
RFP Nos. 31–34. For the reasons that follow, Defendants arguments misconstrue both
the requirements for establishing a uniform practice and the reasonable care standard.
Defendants allege as an affirmative defense that Customs has an “established and
uniform practice of allowing and liquidating entries involving the exact same behavior
complained of in this case in numerous ports, by numerous importers, over a long period
of time.” See Maverick & Good Times’s Answer at Fifth Affirm. Defense; Gateway’s
Answer at Fifth Affirm. Defense. They refer to Customs’ longstanding position, now
codified at 19 U.S.C. § 1315, to give notice of a change in EUP that results in a higher
rate of duty or charge. The proscription against unnotified changes to an EUP, set forth
under section 1315, centers on the consistent administration of rates of duty or charges.
Section 1315 provides that “[n]o administrative ruling resulting in the imposition of a higher
rate of duty or charge . . . applicable to imported merchandise under an [EUP] shall be
effective” without notice. See 19 U.S.C. § 1315(d). Before the publication of a ruling
which has the effect of changing a rate of duty or charge within the meaning of 19 U.S.C.
§ 1315(d), notice that the practice (or prior ruling on which that practice was based) is
under review will be published in the Federal Register and interested parties will be given
an opportunity to make written submissions with respect to the correctness of the
contemplated change. The invocation of EUP is simply inapposite. It applies to rulings
that establish rates of duty or charges, not enforcement decisions. See, e.g., Sea-Land
Service, Inc. v. United States, 23 CIT 679, 689–90, 69 F. Supp. 2d 1371, 1380 (1999)
(noting that section 1315(d) is limited to an administrative ruling and does not apply when
a judicial decision mandates a change in an EUP).
Consol. Court No. 17-00174 Page 9
Moreover, even if one were to adapt the principle embodied in the terminology
EUP, here it would be a poor fit. The plain meaning of practice is “[t]he act of
accomplishing something; the actual application of knowledge through performance.”
BLACK’S LAW DICTIONARY 1419 (11th ed. 2019). 9 Declining to act, therefore, does not
establish a practice. By contrast, the government has discretion to dedicate resources in
bringing civil actions as it sees fit. Therefore, Defendants attempt to defend the
complained-of behavior by reference to Customs’ alleged practice of non-enforcement
not only misconstrues section 1315 but also misunderstands Customs’ enforcement
authority.
With respect to Defendants’ “reasonable care” defense, Customs’ guidelines
define “reasonable care” as follows:
All parties, including importers of record or their agents, are required to
exercise reasonable care in fulfilling their responsibilities involving entry of
merchandise. These responsibilities include, but are not limited to: providing
a classification and value for the merchandise; furnishing information
sufficient to permit Customs to determine the final classification and
valuation of merchandise; taking measures that will lead to and assure the
preparation of accurate documentation, and determining whether any
applicable requirements of law with respect to these issues are met. In
addition, all parties, including the importer, must use reasonable care to
provide accurate information or documentation to enable Customs to
determine if the merchandise may be released. Customs may consider an
importer's failure to follow a binding Customs ruling a lack of reasonable
care. In addition, unreasonable classification will be considered a lack of
reasonable care (e.g., imported snow skis are classified as water skis).
Failure to exercise reasonable care in connection with the importation of
merchandise may result in imposition of a section 592 penalty for fraud,
gross negligence or negligence.
9
The term “establish” is defined as “[t]o make or form; to bring about or into existence”, and
“uniform” as “[c]haracterized by a lack of variation; identical or consistent.” BLACK’S LAW
DICTIONARY 688, 1840 (11th ed. 2019).
Consol. Court No. 17-00174 Page 10
19 C.F.R. Pt. 171, App. B(D)(6) (2014). 10 Therefore, importers exercise reasonable care
when they, inter alia, provide sufficient and accurate information to Customs to permit it
to determine the proper value of the merchandise. Here, Defendants are accused of
making material omissions, and false declarations, having the potential to prevent proper
valuation of the merchandise. See Compl. at ¶ 23, July 10, 2017, ECF No. 2; Compl. at
¶ 23, Sept. 6, 2017 ECF No. 2 (from associated docket Ct. No. 17-00232). Evidence of
how Plaintiff has treated other such omissions and declarations is not relevant to the
question of whether Defendants acted reasonably. 11 The reasonable care standard is
concerned with the reasonableness of a defendant’s actions alone—not whether the
actions of similarly situated entities evinces a “reasonableness” standard that would bear
on defendant’s actions. See e.g., United States v. Aegis Sec. Ins. Co., 43 CIT __, __,
Slip Op. 19-162 at 26 (Dec. 17, 2019) (determining that, whether or not similarly situated
importers would have made the same error, or “would have been similarly inattentive,”
does not inform the question of whether the importer acted reasonably. Whether or not
one exercises reasonable care does not depend upon the “consensus in the
community[,]” but rather, on the “application of reason.”).
10
The citation is to the Code of Federal Regulations 2014 edition, the most recent version in effect
at the time of the last entries of the subject merchandise. The entries at issue in this action were
imported between the years 2012 and 2015. See Compl. at ¶ 1.
11
The HR Report on the amendments to 19 U.S.C. § 1592 provides examples of steps an importer
should take in meeting the “reasonable care” standard, including: “seeking guidance from the
Customs Service through the pre-importation or formal ruling program; consulting with a Customs
broker, a Customs consultant, or a public accountant or an attorney; using in-house employees
such as counsel, [etc.]” H.R. REP. NO. 103-361, pt.1, at 120 (1993), reprinted in 1993
U.S.C.C.A.N. 2552, 2670. Notably, these examples do not include relying on the government’s
past action or inaction toward the behavior. Id.Consol. Court No. 17-00174 Page 11
Likewise, Defendants’ desire, here, to see investigatory files in order to
demonstrate that the United States has not acted in a similar manner against other
companies in the past cannot serve any relevant purpose. See Maverick & Good Times’s
Answer at Fifth Affirm. Defense; Gateway’s Answer at Fifth Affirm. Defense. Customs’
past enforcement decisions are not relevant to the question of whether the importer has
exercised reasonable care. See e.g., United States v. Hitachi America, Ltd., 21 CIT 373,
391, 964 F. Supp. 344, 363 (1997), aff’d in part, rev’d in part on other grounds, 172 F.3d
1319 (1999) (the federal government is not estopped to enforce laws against citizens
when it later ascertains that their actions were not in compliance with the law.). 12
Accordingly, the motion to compel responses to Maverick RFP Nos. 9, 25, 30, 31,
32, 33, 38, 39 and Gateway RFP Nos. 10, 26, 31, 32, 33, 34, 39, 40 is denied, because
the discovery sought is not relevant.
II. Affiliate Tax Information
Defendants’ request for affiliate nonparty tax information is also denied for lack of
relevancy. Defendants argue that the affiliate nonparty tax information is relevant
because it would demonstrate that its importation practices were reasonable under the
circumstances. See Maverick’s Mot. at 7–13. Specifically, Good Times explained that
“[t]he history of the governments’ interaction with Good Times and its owners is relevant
to the Defendants fifth affirmative defense which asserts ‘that Plaintiff had a uniform and
12
Defendants also argue that they need much of this information to discern how Plaintiff
calculated the FETs due. See Maverick Status Report at Maverick RFP Nos. 9, 25, 38, 39;
Gateway Status Report at Gateway RFP Nos. 10, 26, 39, 40. Separately, Defendants specifically
seek to compel documents concerning the calculation of the FET, and the court is granting the
Defendants’ motion with respect to those particular requests. See, e.g., Maverick Status Report
at Maverick RFP No. 4; Gateway Status Report at Gateway RFP Nos. 4, 5.
Consol. Court No. 17-00174 Page 12
established practice of allowing and liquidating entries involving the exact same behavior
complained of in this case[.]’” Maverick’s Mot. Ex. I at 2. Here, as explained above,
evidence that the government refrained, in the past, from acting against similar
arrangements is not relevant to the issue of whether Defendants acted negligently
because the reasonable care inquiry is focused on whether Defendants themselves acted
reasonably. See Aegis, 43 CIT at __, Slip Op 19-162 at 24–27. Plaintiff is not estopped
from commencing this enforcement. See Hitachi, 21 CIT at 391, 964 F. Supp. at 363.
Therefore, the motion to compel responses is denied for Good Times RFP Nos. 4, 5, 6,
7, 8, 15, 17, 18, 19, 20, 21.
III. Remaining RFPs and Interrogatories
The remaining RFPs and interrogatories in dispute largely concern the sufficiency
of Plaintiff’s response either with respect to electronically stored information (“ESI”), or
the completeness of interrogatories. The Defendant’s motion to compel is granted with
respect to Maverick RFP Nos. 4, 10, 11, 12, 13, 14, 15, 16, 19, 20, 22, 24, 26, 27, 28, 29;
Gateway RFP Nos. 4, 5, 11, 12, 13, 14, 15, 16, 17, 19, 20, 22, 24, 27, 28, 29, 30; Good
Times RFP Nos. 1, 3, 9, 10, 13, 23; Maverick Interrogatory Nos. 8, 9, 11, 19, 24; Gateway
Interrogatory Nos. 8, 9, 11, 19, 24; and, Good Times Interrogatory No. 19. The motion is
denied with respect to Maverick RFP No. 21, Gateway RFP No. 21, Good Times RFP No.
11, as well as Maverick Interrogatory Nos. 15, 20, 21, 25; Gateway Interrogatory Nos. 15,
20, 21, 25; and, Good Times Interrogatory Nos. 7, 9, 10, 22, 23, as discussed further
below.
Consol. Court No. 17-00174 Page 13
RFPs
U.S. Court of International Trade Rule 34(b) governs production of ESI and
provides:
Unless otherwise stipulated or ordered by the court, these procedures apply
to producing documents or electronically stored information:
(i) A party must produce documents as they are kept in the usual course
of business or must organize and label them to correspond to the
categories in the request;
(ii) If a request does not specify a form for producing electronically
stored information, a party must produce it in a form or forms which
it is ordinarily maintained or in a reasonably usable form or forms[.]
USCIT R. 34(b)(2)(E); see also Fed. R. Civ. P. 34(b)(2)(E). Rule 34(b)(2)(E) addresses
the form that a production of documents or ESI should assume in response to a request
for production, and contemplates that a responding party must produce ESI organized
and labeled to correspond to the categories in the request, unless the responding party
can produce ESI as maintained in the ordinary course of business. 13
13
Decisions interpreting the analogous Federal Rule of Civil Procedure Rule 34(b)(2)(E) provide
guidance to discerning the requirements of production. See USCIT R. 1 (“The court may refer for
guidance to the rules of other courts.”). Courts are split as to whether ESI production must comply
with both Federal Rule of Civil Procedure Rule 34(b)(2)(E)(i) and 34(b)(2)(E)(ii), given that
subsections (i) and (ii) appear to impose separate requirements on “documents” and “ESI.” Some
courts read the Advisory Committee Notes as evincing the drafter’s intent to distinguish traditional
hardcopy production from the “new” category of electronic production. See, e.g., National Jewish
Health v. WebMD Health Services Group, Inc., 305 F.R.D. 247, 252–53 (D. Colo. 2016) (referring
to Fed. R. Civ. P. 34 Advisory Committee Notes (2006 Amendment, subdivision b)). In doing so,
they emphasize that the searchability of electronic documents, unlike paper documents, warrants
two different production procedures. See id. at 253. Although a particular ESI form may be
“reasonably usable” if it is searchable, see, e.g., Anderson Living Trust, 298 F.R.D. 514, 527 (D.
N.M. 2014) (explaining that the drafters of Rule 34(b)(2)(E)(ii) intended to treat ESI as an entirely
new category, separate and apart from documents, in order to recognize that text searching
(footnote continued)
Consol. Court No. 17-00174 Page 14
Therefore, although Rule 34 may not oblige a responding party to organize and
label documents for the convenience of the requesting party, the production of ESI must
be rationally organized to permit the requesting party, with reasonable effort, to identify
and obtain the documents responsive to their request. See City of Colton v. American
Promotional Events, Inc., 277 F.R.D. 578, 584–85 (C.D. Cal. 2011). A responding party
fails to meet its duty of production when it produces undifferentiated documents, raising
“unnecessary obstacles for the requesting party” in the production of ESI. See Fed. R.
Civ. P. 34 Advisory Committee Notes (2006 Amendment, subdivision b).
Plaintiff’s production with respect to many RFPs is insufficient. Defendants’ RFPs
were often met with the general assertion that “[t]he Government has produced all
responsive, non-privileged documents in its possession.” See, e.g., Good Times Status
Report at Good Times RFP No. 10. Sometimes the responses reference examples yet
technologies allow parties to organize ESI according to their own preferences), other courts have
reasoned that a mere ability to search without organizing guideposts does not promote the
expeditious resolution of the dispute, the purpose of discovery. See, e.g., City of Colton, 277
F.R.D. at 584.
Given the nature of the present dispute and the types of documents involved, it would be
counterproductive to adopt an approach that imposes no organizing guideposts. As a specialized
court that may confront discovery disputes involving voluminous government files—electronic,
paper, and electronic versions of paper documents—that are maintained by various agencies, as
well as industry and company documents and files, it is unlikely that the documentary record,
reviewed by the court, will correspond to the “form or forms which it is ordinarily maintained,” see
USCIT R. 34(b)(2)(E)(ii), or that mere searchability will enable a party requesting production to
reasonably identify responsive documents. Moreover, this approach is also supported, in part,
by the Advisory Committee Note to the 2006 amendment, which states that “a Rule 34 request
for production of ‘documents’ should be understood to encompass, and the response should
include, [ESI] unless discovery in the action has clearly distinguished between [ESI] and
‘documents’”. Fed. R. Civ. P. 34 Advisory Committee Notes (2006 Amendment, subdivision a).
Thus, to the extent that the parties in this case disagree on whether subparagraph (i) or (ii)
governs disposition of the motion to compel, Gateway’s Mot. at 3–4; Maverick’s Mot. at 4–5, both
apply to Plaintiff’s production.
Consol. Court No. 17-00174 Page 15
contain inconclusive language such as “include” and “and other documents”—which
Defendants object to as failing to identify what other responsive documents are contained
in the record. 14 See, e.g., id. at Good Times RFP Nos. 1, 3. Likewise, Plaintiff references
emails in a general sense without any indication as to what emails are responsive or how
they might be located. See, e.g., id. at Good Times RFP No. 1. Further, Plaintiff asserts
it has produced all non-privileged documents, yet it fails to provide a privilege log. See,
e.g., id. at Good Times RFP No. 10, 13. Although it is true that searchable ESI weighs in
favor of usability, “the purpose of discovery is to enable parties to obtain the factual
information needed to prepare their cases for trial[,]” Primos, Inc. v. Hunter’s Specialties,
Inc., 451 F.3d 841, 851 (Fed. Cir. 2006). In this case, Plaintiff’s general responses, with
inconclusive language and no direction as to where to find relevant documents, and
without furnishing a privilege log, fall short. The court “must therefore consider the ‘unfair
and prejudicial surprise’ to a party that may result from allowing [last-minute production
of evidence] to be presented during trial.” Id. (citations omitted). The purpose of
discovery is to narrow the issues and to secure both the evidence to be used at trial as
well as information as to the existence of evidence that may be used at trial. United States
v. Optrex Am., Inc., 28 CIT 987, 988, Slip Op. 04-79 at 2 (2004). “Mutual knowledge of
14
If a party fails to disclose information—or to supplement interrogatory and RFP responses in a
timely manner or as ordered by the court—that party “is not allowed to use that information . . . to
supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified
or is harmless.” USCIT R. 26(a), 26(e), 37(c)(1). Moreover, under USCIT Rule 37(a)(3), for
purposes of a motion to compel, “an evasive or incomplete disclosure, answer, or response must
be treated as a failure to disclose, answer, or respond.” Therefore, the court will not allow Plaintiff
to avoid a potential Rule 37(c)(1) sanction by simply asserting that the relevant document is
among the documents produced.
Consol. Court No. 17-00174 Page 16
all the relevant facts gathered by both parties is essential to proper litigation.” Id. at 988
(citing to Hickman v. Taylor, 329 U.S. 495, 507 (1947)).
Plaintiff must answer the RFPs posed to it comprehensively, and state whether or
not there are any other responsive documents, contained in the ESI, and, if so, either
identify those documents, by Bates number or another label, or provide Defendants with
sufficient information so that it can identify and find those documents. Therefore,
Defendants’ motion to compel is granted with respect to the following requests:
x Maverick RFP Nos. 4, 10, 11, 12, 13, 14, 15, 16, 19, 20, 22, 24, 26, 27, 28, 29;
x Gateway RFP Nos. 4, 5, 11, 12, 13, 14, 15, 16, 17, 19, 20, 22, 24, 27, 28, 29, 30;
and,
x Good Times RFP Nos. 1, 3, 9, 10, 13, 23.
Finally, Plaintiff’s production in response to Good Times RFP No. 11 is sufficient
because Plaintiff has indicated where, in Plaintiff’s production, Defendants may locate the
requested information. Plaintiff’s production is also sufficient for Maverick RFP No. 21 and
Gateway RFP No. 21, because Plaintiff has indicated that it is “currently unaware of any
such documents.” As Defendants note, should Plaintiff become aware of such
documents, Plaintiff shall be obliged to disclose such information in a timely manner
pursuant to USCIT Rule 26(e).
Interrogatories
Defendants challenge Plaintiff’s interrogatory responses as deficient and not in
compliance with USCIT Rule 33(d), which sets out the parameters for a responding party
to answer an interrogatory by producing business records, including ESI. Gateway’s Mot.
Consol. Court No. 17-00174 Page 17
at 12–15; Maverick’s Mot. at 13–17. Defendants contend that Plaintiff must specify the
documents from which it can obtain an answer to its interrogatories. Gateway’s Mot. at
13–14; Maverick’s Mot. at 14–15. Plaintiff counters that “[n]o further interrogatory
responses are warranted because [its] production of easily searchable ESI is more than
sufficient to meet the USCIT R. 33(d) requirements.” Pl.’s Opp’n Br. at 10. For the
reasons that follow, Defendant’s motion to compel is granted for Maverick Interrogatory
Nos. 8, 9, 11, 19, 24; Gateway Interrogatory Nos. 8, 9, 11, 19, 24; and, Good Times
Interrogatory No. 19. However, the motion is denied for Maverick Interrogatory Nos. 15,
20, 21, 25; Gateway Interrogatory Nos. 15, 20, 21, 25; and, Good Times Interrogatory
Nos. 7, 9, 10, 22, 23.
USCIT Rule 33(d) permits a responding party to answer an interrogatory by
producing business records in circumstances where “the answer to an interrogatory may
be determined by examining . . . a party’s business records (including electronically stored
information)” and “the burden of deriving or ascertaining the answer will be substantially
the same for either party[.]” USCIT R. 33(d). If such circumstances exist, then the
responding party must further “(1) specify[] the records that must be reviewed, in sufficient
detail to enable the interrogating party to locate and identify them as readily as the
responding party could; and (2) giv[e] the interrogating party a reasonable opportunity to
examine and audit the records[.]” Id.Courts determine the adequacy of an Federal Rule of Civil Procedure Rule 33(d)
response according to the nature and specificity of the request, see In re Sulfuric Acid
Antitrust Litig., 231 F.R.D. 320, 323 (N.D. Ill. 2005) (whether an interrogatory is
Consol. Court No. 17-00174 Page 18
responsive depends, first, on the question asked), 15 with due attention given to the
superior knowledge and familiarity the responding party has with the referenced
documents. See e.g., Bayview Loan Servicing, LLC. v. Boland, 259 F.R.D. 516, 519 (D.
Colo. 2009) (holding that plaintiff’s response to interrogatories that asked for specific
information was insufficient, because plaintiff merely indicated that information was on a
CD, even though the CD indexed and catalogued files). Vague references to documents
do not suffice; rather, the responding party must “adequately and precisely specif[y] for
each interrogatory, the actual documents where information will be found.” See U.S.
S.E.C. v. Elfindepan, S.A., 206 F.R.D. 574, 576–77 (M.D.N.C. 2002).
Defendants Maverick and Gateway request that Plaintiff state or identify with
specificity “every fact” or “every statement” that it believes demonstrates a specific
allegation made in the complaint in Interrogatory Nos. 8, 9, 19. See Maverick Status
Report at Maverick Interrogatory Nos. 8, 9, 19; Gateway Status Report at Gateway
Interrogatory Nos. 8, 9, 19. Maverick and Gateway also request that Plaintiff “specify in
detail every term and condition ‘in the contract’ which [the government] contends evinces
‘control’ and how that term or condition evinces such control.” Maverick Status Report at
Maverick Interrogatory No. 11; Gateway Status Report at Gateway Interrogatory No. 11.
Finally, Good Times asks whether Plaintiff contends “that there were any common
owners, directors, officers, employees, [etc.] . . . between Maverick and Good Times[,]”
15
An interrogatory may inquire into a party’s contentions in or opinions of the case, which “may
be used to narrow and define the issues for trial” and help a party determine the proof required to
rebut the other party’s position. Johnson v. Kraft Foods North America, Inc., 236 F.R.D. 535, 544
(D. Kan. 2006). Rule 33(d) governs such “contention interrogatories,” and, insofar as a contention
interrogatory seeks material facts supporting allegations, courts have deemed them proper. See,
e.g., id.; see also Ayers v. Continental Cas. Co., 240 F.R.D. 216, 227–228 (N.D.W. Va. 2007).
Consol. Court No. 17-00174 Page 19
and, if so, to “state with specificity the nature of the sharing and/ or the common
relationship and [to] identify every fact and document which supports [the government’s]
contention.” Good Times Status Report at Good Times Interrogatory No. 19.
Unlike United States v. Rachel, 289 F. Supp. 2d 688 (D. Md. 2003), which Plaintiff
purports to be directly applicable, 16 see Pl.’s Opp’n Br. at 10, Defendants’ interrogatories
seek evidence that supports specific allegations and contentions raised by Plaintiff.
Plaintiff’s responses to these requests do not appear to take issue with the breadth of the
interrogatory. Defendants’ interrogatories, however, were met, in a number of instances,
with a general response that leads with the statement “[t]he evidence shows” followed by
an assertion, followed a string of apparently non-exhaustive examples which are prefaced
by the phrase “[r]elevant documents include . . .” See, e.g., Maverick Status Report at
Maverick Interrogatory Nos. 8, 9, 11; Gateway Status Report at Gateway Interrogatory
Nos. 8, 9, 11. Moreover, Plaintiff has not included a privilege log, has referenced
unspecified emails or documents, and has used language such as “includes” to suggest
that its answer is not complete. Thus, this court, in its discretion, determines that these
interrogatories were specific enough to warrant relatively specific and conclusive
responses.
Similarly, Plaintiff in certain instances references categories of documents, and
concludes by referring Defendants to “documents produced by the Government in this
16
Plaintiff’s reliance on United States v. Rachel, is misplaced. The starting point for the Rule
33(d) analysis in that case was the understanding that the movant’s “document requests were . .
. extremely broad.” Rachel, 289 F. Supp. 2d at 693. From there, the court determined that it was
appropriate for the government to respond by providing “access to all available documents” as
long as such documents “were maintained in the ordinary course of business in the government
investigation.” Id.Consol. Court No. 17-00174 Page 20
litigation.” See, e.g., Maverick Status Report at Maverick Interrogatory Nos. 19, 24;
Gateway Status Report at Gateway Interrogatory Nos. 19, 24. This phrase is a catchall
that serves to obscures the response. By employing this phrase, Plaintiff is effectively
stating that the answer to this question is or may be somewhere among the documents
produced. A response of this nature is no response at all. Plaintiff must identify those
documents, by Bates number or another label, or provide Defendants with sufficient
information so that it can identify and find those documents. Therefore, the Defendants
motion to compel with respect to the following interrogatories is granted:
x Maverick Interrogatory Nos. 8, 9, 11, 19, 24;
x Gateway Interrogatory Nos. 8, 9, 11, 19, 24; and,
x Good Times Interrogatory No. 19.
A number of interrogatories, and their respective responses, do not fall within the
ambit of Rule 33(d), because Plaintiff responds with an answer, rather than by referring
the parties to the ESI. To the extent that such interrogatories are not objected to, they
must be “answered separately and fully in writing under oath.” USCIT R. 33(b)(3). For
purposes of a motion to compel, USCIT Rule 37(a)(3) provides that evasive or incomplete
answers shall be treated as a failure to respond. See also NEC America, Inc., v. United
States, 10 CIT 323, 325, 636 F. Supp. 476, 479 (1986). Ultimately, the court has
discretion to decide whether Plaintiff’s response is satisfactory. See id.The court, in its discretion, determines that Plaintiff’s responses to the
interrogatories listed are sufficient because they illustrate a legal dispute over the framing
Consol. Court No. 17-00174 Page 21
of this case. 17 These interrogatories, and their responses, demonstrate that Plaintiff and
Defendants have differing theories of how the pertinent statutes, regulations, and case
law operate, and what obligations flow therefrom. Defendants obviously believe that
Plaintiff cannot support many of its claims with “specificity”, including its claim that
Defendants operated pursuant to a “special arrangement.” However, as this court has
already ruled, Plaintiff has sufficiently raised a claim upon which relief can be granted.
See Maverick I, 42 CIT at __, 295 F. Supp. 3d at 1379. The court declines to require
Plaintiff to litigate the issue before trial. No further response is warranted, save for any
subsequent obligations to disclose pursuant to USCIT Rule 26(e). Therefore,
Defendants’ motion to compel is denied with respect to:
x Maverick Interrogatory Nos. 15, 20, 21, 25;
x Gateway Interrogatory Nos. 15, 20, 21, 25; and,
x Good Times Interrogatory Nos. 7, 9, 10, 22, 23.
Privilege log
In many instances, Plaintiff refers to privileged information but has failed to furnish
a privilege log. When a party withholds allegedly privileged but otherwise discoverable
information, that party “must expressly make the claim; and describe the nature of the
17
Plaintiff objects to Maverick Interrogatory No. 15, Gateway Interrogatory No. 15, and Good
Times Interrogatory Nos. 7, 9, 10, as requiring a legal conclusion. See Maverick Status Report
at Maverick Interrogatory No. 15; Gateway Status Report at Gateway Interrogatory No. 15; Good
Times Status Report at Good Times Interrogatory Nos. 7, 9, 10. “An interrogatory is not
objectionable merely because it asks for an opinion or contention that relates to fact or the
application of law to fact[.]” USCIT R. 33(a)(2). Plaintiff’s objection is thus unavailing. The court
may, however, order that the interrogatory “need not be answered until designated discovery is
complete, or until a pretrial conference or some other time.” Id. Nonetheless, for the reasons that
follow, the court determines that Plaintiff’s responses are sufficient to satisfy the purposes of
discovery in this proceeding.
Consol. Court No. 17-00174 Page 22
documents . . . not produced or disclosed – and do so in a manner that, without revealing
information itself privileged . . . , will enable the other parties to assess the claim.” USCIT
R. 26(b)(5)(A). That party must provide a privilege log explaining the contents of the
documents in question and the reason why those documents merit privilege. See United
States v. Optrex Am., Inc., 28 CIT 1231, 1231–32, Slip Op. 04-92 at 2–3 (2004) (citing
Burns v. Imagine Films Entm’t, Inc., 164 F.R.D. 589, 594 (W.D.N.Y. 1996)).
To the extent that Plaintiff asserts that it has produced all non-privileged
documents in its responses to RFPs and interrogatories, it implies that there are privileged
yet discoverable documents that it has not produced. Therefore, Plaintiff must produce
a privilege log that expressly makes and explains each claim of privilege and that
conforms to the requirements of USCIT R. 26(b)(5)(A).
CONCLUSION
For the foregoing reasons, it is
ORDERED that Defendants’ motion to compel discovery is granted; and it is further
ORDERED that Plaintiff will provide complete responses to the following requests
for production: Maverick RFP Nos. 4, 10, 11, 12, 13, 14, 15, 16, 19, 20, 22, 24, 26, 27,
28, 29; Gateway RFP Nos. 4, 5, 11, 12, 13, 14, 15, 16, 17, 19, 20, 22, 24, 27, 28, 29, 30;
Good Times RFP Nos. 1, 3, 9, 10, 13, 23; and, it is further
ORDERED that Plaintiff will provide all documents, information, and other
evidence related to the following interrogatories: Maverick Interrogatory Nos. 8, 9, 11, 19,
24; Gateway Interrogatory Nos. 8, 9, 11, 19, 24; Good Times Interrogatory No. 19; and it
is further
Consol. Court No. 17-00174 Page 23
ORDERED that, notwithstanding the Amended Scheduling Order at ¶ 7, May 30,
2019, ECF No. 64, Plaintiff shall file its responses no later than April 13, 2020; and it is
further
ORDERED that Defendants’ motion for sanctions is denied.
/s/ Claire R. Kelly
Claire R. Kelly, Judge
Dated:February 7, 2020
New York, New York