Erickson's Flooring & Supply Co. v. Basic Coatings, Inc.

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 10a0182n.06
Nos. 08-1981/2580 FILED
Mar 23, 2010
UNITED STATES COURT OF APPEALS LEONARD GREEN, Clerk
FOR THE SIXTH CIRCUIT
ERICKSON’S FLOORING AND SUPPLY CO.,
INC., a Michigan corporation,
Plaintiff-Appellant,
On appeal from the United States
v. District Court for the Eastern District
of Michigan
BASIC COATINGS, INC., an Iowa
corporation; ATLAS COMPANIES, INC., an
Iowa corporation; NELS INGEBRIGTSEN,
jointly and severally,
Defendants-Appellees,
BASIC COATINGS, LLC; BETCO CORP.;
BETCO CORP., LTD.,
Appellees,
and
ERICKSON DECORATING PRODUCTS,
INC., an Illinois corporation,
Defendant.
/
BEFORE: RYAN, COOK, and WHITE, Circuit Judges.
RYAN, Circuit Judge. In two separate appeals, the plaintiff, Erickson’s Flooring
& Supply Co., Inc., asks that we reverse judgments in favor of the defendants (1) refusing
to reconsider an earlier summary judgment for the defendants, (2) declining to confirm an
earlier order holding the defendants in contempt of court, and (3) denying Erickson’s
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Flooring’s motion for relief from judgment pursuant to Federal Rule of Civil Procedure
60(b). We have consolidated the two appeals and we will affirm the district court’s
judgments in both.
I.
Erickson’s Flooring is a wholesale distributor of floor products and for approximately
15 years had an agreement with the defendant, Basic Coatings, Inc., to distribute Basic’s
floor coating products. During 2002 and 2003, the relationship between Erickson’s
Flooring and Basic soured, and in July 2003, Basic terminated the agreement.
In September 2003, Erickson’s Flooring filed suit against Basic and its parent, Atlas
Companies, Inc., alleging federal antitrust claims and a number of state-law claims. Six
months later, the district court dismissed Erickson’s Flooring’s complaint for lack of
prosecution. Within a few months, Erickson’s Flooring refiled its complaint alleging the
same claims as before, against the same defendants. While the case was pending, Atlas
sold Basic to Betco Corporation. Sometime in early 2005, although the specific date is
unclear, Basic’s business records shifted to Betco’s possession.
In July 2005, Erickson’s Flooring requested that Basic produce certain documents
relating to business it had done with Erickson’s Flooring. According to Erickson’s Flooring,
Basic at first denied the existence of the requested documents and then, admitting that the
documents existed, purposely misinformed Erickson’s Flooring as to their location. Basic
denies these allegations and claims the documents were not produced when requested
because the responsible personnel at Basic were unsure whether the documents were in
the possession of Basic, Atlas, or Betco.
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On April 28, 2006, before the discovery issues were resolved, the defendants
moved for summary judgment under Federal Rule of Civil Procedure 56(c). Erickson’s
Flooring responded that it was unable to properly contest the motion because the
defendants had not produced the documents that would demonstrate the genuine issues
of material fact that should be litigated. While the defendants’ Rule 56 motion was pending
decision, Erickson’s Flooring moved that Basic, Atlas, and Betco be held in contempt for
failing to produce the requested documents. At a hearing on August 31, 2006, the district
court held Basic, Atlas, and Betco in contempt and ordered all three companies to produce
the requested documents on or before September 11, 2006, in order to purge themselves
of contempt. The defendants’ Rule 56 summary judgment motion remained under
advisement.
On September 8, 2006, a flatbed truck carrying 164 bankers boxes of documents
arrived at the offices of Erickson’s Flooring’s counsel. According to Erickson’s Flooring,
examination of the contents revealed a vast array of disorganized papers and files, many
having nothing to do with Basic’s business with Erickson’s Flooring and therefore
immaterial to Erickson’s Flooring’s discovery request.
In a later motion to confirm the court’s contempt order, Erickson’s Flooring claimed
it was required to rent storage space for the 164 boxes and hire extra personnel to sift
through and log the disorganized documents in an effort to find those that were material
to the discovery request. Erickson’s Flooring argued that the defendants’ actions were a
deliberate and obvious effort to frustrate a legitimate discovery request, and designed to
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impose great inconvenience and substantial costs upon Erickson’s Flooring before it could
properly respond to the defendants’ summary judgment motion.
The defendants responded that they had difficulty locating the documents, and
ultimately found them in Betco’s possession in a disorderly state. They did the best they
could, they claimed, given Erickson’s Flooring’s overly broad discovery request, the lack
of specific direction from the district court, and the need to act quickly to comply with the
court’s deadline.
Six weeks after receiving the documents, Erickson’s Flooring submitted a status
report asking the court to continue to hold all three companies in contempt until Erickson’s
Flooring could determine whether the documents were in compliance with its discovery
request. During this period, Betco’s counsel attempted to contact Erickson’s Flooring or
its counsel, apparently by telephone and in writing, to inquire whether the documents were
satisfactory and whether there was anything else Erickson’s Flooring required, but
Erickson’s Flooring never responded.
On September 28, 2007, more than a year after Erickson’s Flooring received the
truckload of documents, the district court issued an order granting the defendants’ motion
for summary judgment, dismissing Erickson’s Flooring’s case. On November 2, 2007,
Erickson’s Flooring asked the court to reconsider its summary judgment ruling, on the
ground that Erickson’s Flooring had newly discovered evidence that supported its antitrust
claims and created genuine issues of material fact sufficient to defeat summary judgment
in the defendants’ favor. While that motion was pending, Erickson’s Flooring filed still
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another motion on February 22, 2008, this time asking the court to “confirm” its order
holding Basic, Atlas, and Betco in contempt.
On July 23, 2008, the district court denied Erickson’s Flooring’s motion to confirm
the earlier contempt order and refused to reconsider its summary judgment for the
defendants. Erickson’s Flooring then filed its appeal of these two rulings.
On September 19, 2008, notwithstanding its notice of appeal, Erickson’s Flooring
filed another motion to reconsider in the district court, but this time seeking alternate relief
from the adverse summary judgment pursuant to Federal Rule of Civil Procedure 60(b),
again on the ground that it had newly discovered evidence supporting its antitrust claims
and creating genuine issues of material fact sufficient to defeat summary judgment in the
defendants’ favor. The motion was denied and Erickson’s Flooring filed its second appeal.
The two appeals have been consolidated for our decision. Betco, though not a party to the
original suit, is an intervening party in the appeals.
II.
We will address first the issues raised in the first appeal: whether the district court
abused its discretion in (1) refusing to reconsider its summary judgment for the defendants
and (2) declining to confirm its order holding the defendants in contempt. We will then
move on to the question raised in the second of the consolidated appeals: whether the
district court abused its discretion in denying Erickson’s Flooring’s Rule 60(b) motion for
relief from the adverse summary judgment.
We review a district court’s decision denying a motion to reconsider under the
“abuse of discretion” standard. Gage Prods. Co. v. Henkel Corp., 393 F.3d 629, 637 (6th
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Cir. 2004). A district court’s decision on a motion for civil contempt is also reviewed for an
“abuse of discretion.” Elec. Workers Pension Trust Fund of Local Union #58 v. Gary’s
Elec. Serv. Co., 340 F.3d 373, 378 (6th Cir. 2003).
Considerable deference is accorded a district court’s exercise of discretion and we
do not disturb discretionary rulings unless we have “‘a definite and firm conviction that the
trial court committed a clear error of judgment.’” Amernational Indus., Inc. v. Action-
Tungsram, Inc., 925 F.2d 970, 975 (6th Cir. 1991) (quoting Davis v. Jellico Cmty. Hosp.
Inc., 912 F.2d 129, 133 (6th Cir. 1990)). According to well-settled precedent in this circuit,
“[a] district court abuses its discretion when it relies on clearly erroneous findings of fact,
or when it improperly applies the law or uses an erroneous legal standard.” Tompkin v.
Philip Morris USA, Inc., 362 F.3d 882, 891 (6th Cir. 2004).
A. Motion for Reconsideration of Summary Judgment Order
Erickson’s Flooring’s motion for reconsideration of the district court’s September 28,
2007, order granting summary judgment for the defendants was filed on November 2,
2007. The defendants point out, and Erickson’s Flooring concedes, that the motion to
reconsider was untimely because it was not filed within 10 days of the entry of the
summary judgment, as required by Eastern District of Michigan Local Rule 7.1 and Federal
Rule of Civil Procedure 59(e). Erickson’s Flooring argues, however, that the district court
should have considered the motion for reconsideration as one for relief from judgment
under Rule 60(b). In particular, Erickson’s Flooring claims it is entitled to relief under Rule
60(b)(2), on the ground of “newly discovered evidence.” Fed. R. Civ. P. 60(b)(2).
Erickson’s Flooring argues that the exhibits attached to its motion, consisting of selected
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pieces of business correspondence and corporate records obtained from the bankers
boxes, is “newly discovered evidence” sufficient to support relief under Rule 60(b)(2).
The district court made clear in its written opinion that it was denying Erickson’s
Flooring’s motion for reconsideration because the motion was untimely. But in footnote 2,
the court indicated that Erickson’s Flooring’s motion also failed on its merits because the
papers Erickson’s Flooring attached to its motion were not “newly discovered evidence”
within the meaning of Federal Rule of Civil Procedure 60(b)(2).
In order to prevail under Rule 60(b)(2), a party must demonstrate “that it exercised
due diligence in obtaining the information” and that “the evidence is material and controlling
and clearly would have produced a different result if presented before the original
judgment.” Good v. Ohio Edison Co., 149 F.3d 413, 423 (6th Cir. 1998) (internal quotation
marks and citation omitted). The district court stated Erickson’s Flooring had the bankers
boxes for more than 13 months before bringing their contents to the attention of the court
and offered no reason why the documents were not brought to the court’s attention earlier.
The district court observed that even if Erickson’s Flooring sorted through only one box a
day, it would not have taken a full year to go through all the records. Accordingly, the
district court found that the evidence Erickson’s Flooring presented in support of its motion
was not newly discovered.
We agree that even if the papers the defendants produced were unnecessarily
excessive and in disarray, in taking more than a year to go through the boxes, Erickson’s
Flooring did not exercise “due diligence” in obtaining the evidence it presented to the
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district court as “newly discovered.” The district court did not abuse its discretion in
rejecting the motion for reconsideration either on procedural or substantive grounds.
B. Motion to Confirm Contempt
Erickson’s Flooring contends that the district court abused its discretion when it
declined to “confirm” its earlier contempt order. It is unclear why Erickson’s Flooring,
having obtained a judgment for contempt against the defendants, albeit with a purge
condition, would have need of an order confirming the contempt. It seems logical that the
burden of proceeding would shift to the defendants to seek to have the contempt order set
aside. In all events, we will treat the district court’s refusal to confirm its contempt order
as the equivalent of a refusal to hold the defendants in contempt. This court has held that
contempt is warranted when the moving party produces “clear and convincing evidence”
that another party has “‘violated a definite and specific order of the court requiring him to
perform or refrain from performing a particular act or acts with knowledge of the court’s
order.’” Elec. Workers Pension Trust Fund, 340 F.3d at 379 (quoting NLRB v. Cincinnati
Bronze, Inc., 829 F.2d 585, 591 (6th Cir. 1987)). Erickson’s Flooring argues that Basic’s
and Betco’s actions merited contempt because the defendants purposefully attempted to
thwart Erickson’s Flooring’s discovery efforts by producing 164 bankers boxes containing
thousands of disorganized papers, some having nothing to do with the litigation, contrary
to Federal Rule of Civil Procedure 34. Erickson’s Flooring argues that the defendants’ use
of the familiar ploy of burying the plaintiff in a virtual haystack of thousands of disorganized
papers with the burden and costs of locating the “needle,” was the equivalent of purposeful
noncompliance with the court’s order.
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Although we might have reacted to the defendants’ behavior rather differently than
the district court did, we cannot say that the court abused its discretion in declining to
confirm its earlier contempt order, or stated differently, we think the court did not commit
a clear error of judgment. See Amernational Indus., 925 F.2d at 975. Erickson’s Flooring
filed its motion to confirm contempt on February 22, 2008, more than 17 months after it
had received the documents, and had not, in the meantime, made any complaint to the
defendants or to the district court that the delivered documents were not in compliance with
the court’s discovery order. Moreover, Erickson’s Flooring made no reply to the
defendants’ counsel’s several inquiries whether the materials produced were satisfactory
or whether Erickson’s Flooring needed anything further. The district court also found that,
besides bare allegations, Erickson’s Flooring offered no support for its contention that
Basic and Betco had deliberately produced the documents in a manner designed to
obstruct discovery. We agree with the district court that Erickson’s Flooring failed to
present clear and convincing evidence that contempt was warranted. We find no abuse
of discretion.
In its appellate brief, Erickson’s Flooring also argues that the district court should
have imposed sanctions under 28 U.S.C. § 1927. Sanctions may be imposed under this
section on attorneys who “unreasonably and vexatiously” multiply legal proceedings. 28
U.S.C. § 1927. Erickson’s Flooring argues that the defendants’ counsel did just that
because they purposefully attempted to thwart Erickson’s Flooring’s legitimate attempts to
obtain discovery. The district court found that there was no evidence supporting these
allegations, and we conclude that this finding was not clearly erroneous. The district court
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did not abuse its discretion under either the Federal Rules of Civil Procedure or 28 U.S.C.
§ 1927 in denying Erickson’s Flooring’s motion to confirm contempt.
C. Motion for Relief from Judgment
After filing its first appeal in this court, Erickson’s Flooring filed a Rule 60(b) motion
in the district court, arguing once again that the documents it had attached as exhibits to
its earlier motion for reconsideration were “newly discovered evidence” sufficient to support
a claim of relief from judgment. After the district court denied this motion, Erickson’s
Flooring filed its second appeal.
The district court held that it lacked jurisdiction to consider the 60(b) motion because
it was presented after the first notice of appeal was filed. In its appellate brief, Erickson’s
Flooring concedes that the district court was correct in finding that it lacked jurisdiction to
rule on the motion, but insists that the district court should nevertheless have considered
the merits of the motion for relief from judgment and issued a “discretionary opinion”
pursuant to the procedure set out in First National Bank v. Hirsch, 535 F.2d 343, 345-46
(6th Cir. 1976).
We review a trial court’s decision on a motion for relief from judgment under Rule
60(b) for an abuse of discretion. Doe v. Lexington-Fayette Urban County Gov’t, 407 F.3d
755, 760 (6th Cir. 2005). Erickson’s Flooring offers no support for the contention that a
district court is required to issue a discretionary opinion on a motion for relief from
judgment when it lacks the jurisdiction to rule on it, and we know of no such support. We
are satisfied that the district court did not abuse its discretion when it denied Erickson’s
Flooring’s September 19, 2008, motion for relief from judgment.
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III.
For the reasons stated, we conclude that the district court did not abuse its
discretion in denying Erickson’s Flooring’s motion for reconsideration, motion to confirm
contempt, and motion for relief from judgment. We therefore AFFIRM the district court’s
judgments.