LIBERTY INSURANCE UNDERWRITERS, INC., V. BEAUFURN, LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

LIBERTY INSURANCE UNDERWRITERS, )

INC., )

)

Plaintiff, )

)

v. ) 1:16CV1377

)

BEAUFURN, LLC, )

)

Defendant. )

MEMORANDUM OPINION AND RECOMMENDATION

OF UNITED STATES MAGISTRATE JUDGE

This case comes before the undersigned United States

Magistrate Judge for a recommended ruling on Defendant’s Motion to

Compel Deposition Testimony and Motion for Sanctions (Docket Entry

94).1 Because Defendant’s counsel did not (and could not) certify

that he (A) engaged in good-faith, pre-filing consultation with

Plaintiff’s counsel, and/or (B) diligently tried to resolve this

1 Generally, “motions to compel discovery” under the Federal

Rules of Civil Procedure (the “Rules”) constitute “[n]ondispositive

matters [which] may be referred to a magistrate judge [for rulings]

without the parties’ consent.” Mvuri v. American Airlines, Inc.,

776 F. App’x 810, 810-11 (4th Cir. 2019) (citing Fed. R. Civ. P.

72(a)), cert. denied, ___ U.S. ___, 140 S. Ct. 1227 (2020).

Similarly, as a general proposition, “[an] order disposing of [a]

Rule 37 motion for sanctions is undoubtedly a nondispositive matter

[for purposes of] Rule 72.” Kebe ex rel. K.J. v. Brown, 91

F. App’x 823, 827 (4th Cir. 2004). However, because the instant

Motion seeks (as one alternative form of relief) “an order

dismissing [Plaintiff’s] claim for equitable subrogation” (Docket

Entry 94 at 4), the undersigned Magistrate Judge will enter a

recommendation in this instance, see Fed. R. Civ. P. 72(b)(1)

(mandating that, “when assigned, without the parties’ consent, to

hear a pretrial matter dispositive of a claim,” a “magistrate judge

must enter a recommended disposition”).

discovery dispute without litigation, the Court should deny the

instant Motion pursuant to Local Rule 37.1(a).

INTRODUCTION

Defendant brought the instant Motion (at least nominally)

“pursuant to Rule 37(a)(3)(B)(iv)” (id. at 1),2 to secure either:

1) an order directing Plaintiff “to provide full and complete

responses to questions posed during [Defendant’s] deposition of

[Plaintiff] to which [Plaintiff’s] counsel instructed [Plaintiff’s]

designee not to respond or answer” (id.; see also id. at 4

(“request[ing that] this Court enter an order compelling

[Plaintiff] to attend another [Rule] 30(b)(6) deposition, to

compensate [Defendant] for the time and expense of both the first

deposition and any further depositions ordered by this Court, and

to respond in full to all questions regarding [] topics [pertaining

2 The provision of the Rules cited by Defendant permits

motions to compel when “a party fails to produce documents or fails

to respond that inspection will be permitted – or fails to permit

inspection – as requested under Rule 34.” Fed. R. Civ. P.

37(a)(3)(B)(iv). Given that the instant Motion seeks to compel

oral deposition testimony (see Docket Entry 94 at 1), Defendant

likely intended to invoke the provision of the Rules permitting

motions to compel when “a deponent fails to answer a question asked

under Rule 30,” Fed. R. Civ. P. 37(a)(3)(B)(i); see also Fed. R.

Civ. P. 30 (providing for “Depositions by Oral Examination” (bold

omitted)). The instant Motion does not identify the basis for its

sanctions request (see Docket Entry 94 at 1-4), but the

accompanying Memorandum in Support grounds that request on Rule 30,

which (as quoted by Defendant) authorizes “‘impos[ition of] an

appropriate sanction – including the reasonable expenses and

attorney’s fees incurred by any party – on a person who impedes,

delays, or frustrates the fair examination of the deponent’”

(Docket Entry 95 at 20 (quoting Fed. R. Civ. P. 30(d)(2))).

2

to Plaintiff’s involvement in the underlying action], regardless of

any claimed privilege or protection”)); or

2) “f[ijn the alternative, . . . an order prohibiting

[Plaintiff] from introducing at trial any evidence regarding []

topics [pertaining to Plaintiff’s involvement in the underlying

action] as a sanction for the intentional refusal to conduct

discovery on those topics and for the untimely objection to

deposition questions regarding those topics; or . . . an order

dismissing [Plaintiff’s] claim for equitable subrogation for lack

of evidence” (id. at 4).

Plaintiff has responded that, inter alia, the Court should

deny the instant Motion under the terms of Local Rule 37.1(a).

(See Docket Entry 97 at 4-5.) That Local Rule states:

The Court will not consider motions and objections

relating to discovery unless moving counsel files a

certificate that after personal consultation and diligent

attempts to resolve differences the parties are unable to

reach an accord. The certificate shall set forth the

date of the conference, the names of the participating

attorneys, and the specific results achieved. It shall

be the responsibility of counsel for the movant to

arrange for the conference and, in the absence of an

agreement to the contrary, the conference shall be held

in the office of the attorney nearest the court location

where the initial pretrial conference was convened or, in

the absence thereof, nearest Lo Greensboro.

Alternatively, at any party’s request, the conference may

be held by telephone.

M.D.N.C. LR 37.1(a) (emphasis added); see also Fed. R. Civ. P.

37 (a) (1) (requiring that motions to compel “include a certification

that the movant has in good faith conferred or attempted to confer

with the . . . party failing to make . . . discovery in an effort

to obtain it without court action”).

Neither the instant Motion nor the accompanying Memorandum of

Law in Support certifies “that after personal consultation and

diligent attempts to resolve differences the parties [we]re unable

to reach an accord,” M.D.N.C. LR 37.1(a). (See Docket Entries 94,

95.) Per Plaintiff, “Defendant’s moving papers include no such

certification as Defendant did not seek to arrange the required

conference.” (Docket Entry 97 at 5.) As a result, Plaintiff’s

Response contends “the Court should not consider [the instant

M]otion.” (Id.) Defendant has replied to that contention thusly:

During the [Rule] 30(b)(6) deposition of [Plaintiff],

counsel for both parties stated their positions, both

parties made their arguments regarding objections, and

neither party showed any interest in compromising or in

resolving the dispute over the objections made during the

deposition. While this may not function to the exact

letter of the Local Rules regarding “meet and confer” and

the certification of such an attempt when filing a motion

to compel discovery, it certainly functioned in the

spirit of the Rule. During the deposition, each party

had the chance to discuss with counsel and persuade the

other party to agree to its position. Neither party

agreed to the other party’s position. . . .

[Plaintiff’s] insistence that the parties needed to

schedule a post-deposition conference prior to

[Defendant’s filing of the] instant [M]otion amounts to

a procedural objection that would have accomplished

nothing and wasted both parties’ time and resources. It

is clear from the deposition transcript — filed with the

instant [M]otion — that the parties met, conferred, and

were unable to reach an agreement as to the disputed

deposition objections.

(Docket Entry 98 at 1-2 (internal citation omitted) (citing Docket

Entry 94-4 at 28-30).)

4

DISCUSSION

Because the record does not support Defendant’s position that

counsel for the parties conducted the functional equivalent of the

conference required by Local Rule 37.1(a) during the Rule 30(b)(6)

deposition of Plaintiff, the Court should reject Defendant’s

argument that it complied with the “spirit” (id. at 2) – if not the

“letter” (id. at 1) – of Local Rule 37.1(a). Further, the Court

should decline Defendant’s invitation to treat Plaintiff’s

invocation of Local Rule 37.1(a) as a pointless “procedural

objection” (id. at 2) and the consultation obligation imposed by

Local Rule 37.1(a) as a “waste[ of] both parties’ time and

resources” (id.), as inconsistent with sound principles of judicial

economy and respect for the rule of law. Accordingly, the Court

should deny the instant Motion pursuant to Local Rule 37.1(a).

Starting with Defendant’s compliance-in-spirit argument, the

transcript of the Rule 30(b)(6) deposition of Plaintiff reflects

that, after (A) Defendant’s counsel had asked Plaintiff’s designee

slightly more than 100 questions (see Docket Entry 94-4 at 5-28),

five of which Plaintiff’s counsel instructed Plaintiff’s designee

not to answer (see id. at 22 (“Q Why did [Plaintiff] retain

separate counsel from [its insured’s] counsel? [Plaintiff’s

counsel]: . . . I’m going to advise you not to answer that

question. . . . Q Okay. Did [Plaintiff] have any authority or

influence over the decision to settle the lawsuit? [Plaintiff’s

5

counsel]: . . . I’m going to advise you not to answer.”), 27-28

(“Q How did [Plaintiff] arrive at the number that it paid for its

share of the settlement? [Plaintiff’s counsel]: . . . I’m going

to advise you not to answer. . . . Q Did [Plaintiff] believe that

[its insured] was liable for [the plaintiff’s] injuries in the

underlying lawsuit? [Plaintiff’s counsel]: . . . I’ll advise you

not to answer. Q Did [Plaintiff] . . . believe that [Defendant]

was responsible for [those] injuries? [Plaintiff’s counsel]:

. . . [S]ame instruction.”)), and (immediately) after

(B) Plaintiff’s designee had answered “Yes” to the questions “Is it

fair to say that you will not be answering any questions about how

the settlement value was reached on advise [sic] of your counsel?”

and “Is it fair [to say] you will not be offering any testimony

today about [Plaintiff’s] belief as to liability in the underlying

action on advise [sic] of your counsel?” (id. at 28), this exchange

occurred between counsel for the parties:

[Defendant’s counsel]: At this time I’m going to

terminate this deposition until we can file a motion to

compel. I believe [Plaintiff’s designee’s] testimony is

necessary to the prosecution of defense of this case. I

do not believe it is appropriate to be withheld. . . .

I don’t want to waste several hours of [Plaintiff’s

designee’s] time asking questions that [he has] been

instructed not to answer. And I’m certainly not going to

try to bully [him] or try to run over [him].

[Plaintiff’s] counsel’s made it clear [Plaintiff’s

designee] will not be answering questions on those

topics.

[Defendant] reserve[s] the right to hold this deposition

open and renew it at a further date pending any results

from the Court . . . . I think [Plaintiff’s counsel] and

6

I agree that a motion has been filed that will have

direct bearing on this in the future. And we will reach

a new deposition time and date as agreed between the

parties if the Court so orders it.

[Plaintiff’s counsel]: So, okay, I will just respond to

that. And [I] appreciate that there is an issue that we

already discussed. To a certain extent, it is true that

I will continue to object on the same grounds; however,

[Plaintiff’s designee] is available here today, he’s been

made available after the close of discovery to discuss

the underlying facts as they are understood by

[Plaintiff] as to the subrogation claim, including as to

its knowledge of the underlying lawsuit. So he is here

available today to discuss with counsel, and answer and

respond to those types of questions. As I understand it,

though, [Defendant’s] counsel would like to take to the

Court the other issues that we’ve discussed previously.

So if that is what counsel’s choice is, that’s the choice

that they are making. But just to reiterate again,

[Plaintiff’s designee] is available here to talk about

the facts of the underlying case and the subrogation

claim. We just will not get into any information as to

-- the last several questions have indicated [sic] into

what we believe is pretty clearly work product,

information protected by work product. So with that --

[Defendant’s counsel]: Well, hold on. I’m happy to go

through these topics and have you object on the record to

each of them if you would like to?

[Plaintiff’s counsel]: Well, I mean, that’s perfectly

fine. You can do whatever you want. I think I

understand what your objections are. All I’m saying is

that if you [would] like to question the witness as to

the facts, he is available to do that. If you choose not

to do that and want to address the other issues with the

Court, then I guess that’s what you’re going to do.

[Defendant’s counsel]: Well, we can continue. That’s

fine with me.

(Docket Entry 94-4 at 28-30; see also id. at 30-72 (documenting

over 150 more questions by Defendant’s counsel, nine of which met

with instructions that Plaintiff’s designee not answer).)

7

Contrary to Defendant’s assertion, the above-quoted exchange

does not show that “counsel for both parties stated their

positions[ or] . . . made their arguments regarding objections”

(Docket Entry 98 at 1 (citing Docket Entry 94-4 at 28-30)); rather,

Defendant’s counsel abruptly threatened “to terminate thle]

deposition” (Docket Entry 94-4 at 28), based on the vague rationale

that unspecified “testimony [wa]s necessary to the prosecution of

defense of this case” (id.), and then ambiguously declared that

“[Plaintiff’s] counsel’s made it clear [Plaintiff’s designee] will

not be answering questions on those topics” (id. at 29 (emphasis

added)}), without elucidating the “topics” to which Defendant’s

counsel referred (see id.), before cryptically invoking Defendant’s

Motion to Compel Production of Documents (see id. (referring to

Docket Entry 90)). Plaintiff’s counsel thereafter acknowledged the

existence of “an issue that [counsel for the parties] already

discussed” (id.), but never described Plaintiff’s “positions[ or]

. . made [any] arguments” (Docket Entry 98 at 1) regarding any

such issue (see Docket Entry 94-4 at 29). At that point,

Plaintiff’s counsel alluded in jumbled fashion to “the last several

questions” soliciting “what [Plaintiff] believe[d wa]s pretty

clearly work product” (id. at 30), whereupon Defendant’s counsel

elected to proceed with the deposition (see id.) □□

3 Notably, the instant Motion seeks relief for events during

the Rule 30(b) (6) deposition of Plaintiff beyond the objections/

(continued...)

Simply put, the interaction cited by Defendant’s counsel as

proof “that the parties met[ and] conferred . . . [about] the

disputed deposition objections” (Docket Entry 98 at 2) does not

come close to satisfying even the spirit (let alone the letter) of

the Court’s pre-filing requirement of “personal consultation and

diligent attempts to resolve differences,” M.D.N.C. LR 37.1(a).

Indeed, the statement in Defendant’s Reply that, in the course of

the deposition, “neither party showed any interest in compromising

or in resolving the dispute over the objections made during the

deposition” (Docket Entry 98 at 1) only underscores the conclusion

that nothing that occurred in the deposition even approached

compliance with Local Rule 37.1(a). Phrased another way, the Court

should not allow litigants to convert disinterest in compromise

into a license to dispense with pre-filing consultation.

3(...continued)

instructions by Plaintiff’s counsel concerning “work product,” to

which the above-quoted exchange awkwardly adverts (see, e.g.,

Docket Entry 94 at 2 (“[Plaintiff’s] designated representative

repeatedly lacked knowledge directly pertaining to a number of

topics, despite [its] obligation to designate a deponent who was

prepared to testify regarding those same topics.”)), including

events that occurred after the supposed mid-deposition, “meet-and-

confer” (see, e.g., id. (“[Plaintiff’s] counsel instructed

[Plaintiff’s] designated representative not to answer questions on

the basis of attorney-client privilege even after [the] designated

representative waived that privilege by providing responses that

included communications with its attorney.”); Docket Entry 95 at 15

(elaborating on that aspect of instant Motion and citing Docket

Entry 94-4 at 34-35)). Defendant indisputably failed to fulfill

its duties under Local Rule 37.1(a), as to such matters that

counsel for the parties did not discuss and/or could not have

discussed (because they had not yet happened), when the “meet-and-

confer” purportedly took place in the midst of the deposition.

9

As one court explained in connection with its own parallel,

pre-filing consultation local rule:

Inherent in [the local r]ule[]’s language, and essential

to the [local r]ule’s proper operation, is the

requirement that parties treat the informal negotiation

process as a substitute for, and not simply a formalistic

prerequisite to, judicial resolution of discovery

disputes. To that end, the parties must present to each

other the merits of their respective positions with the

same candor, specificity, and support during informal

negotiations as during the briefing of discovery motions.

Only after all of the cards have been laid on the table,

and a party has meaningfully assessed the relative

strengths and weaknesses of its position in light of all

available information, can there be a sincere effort to

resolve the matter.

Nevada Power Co. v. Monsanto Co., 151 F.R.D. 118, 120 (D. Nev.

1993) (emphasis added) (internal citations and quotation marks

omitted); see also Dondi Props. Corp. v. Commerce Sav. & Loan

Ass’n, 121 F.R.D. 284, 289 (N.D. Tex. 1988) (“The purpose of the

conference requirement is to promote a frank exchange between

counsel to resolve issues by agreement or to at least narrow and

focus the matters in controversy before judicial resolution is

sought. Regrettably over the years, in many instances the

conference requirement seems to have evolved into a pro forma

matter.” (italics in original)).4

4 Consistent with the notion that the Court should expect a

better endeavor at diffusing discovery disputes than Defendant’s

counsel made here, no less an authority than the Chief Justice of

the United States has remarked that Rule 1 “charge[s] counsel to

‘affirmatively search out cooperative solutions, chart a cost-

effective course of litigation, and assume shared responsibility

with opposing counsel to achieve just results.’” Stultz v.

(continued...)

10

Likewise, the Court should deny Defendant’s attempt to slip

the constraints imposed by Local Rule 37.1(a) by dismissing any

obligation to participate in “a post-deposition conference prior to

[filing the] instant [M]otion” (Docket Entry 98 at 2), as a mere

“procedural objection that would have accomplished nothing and

wasted both parties’ time and resources” (id.). To begin, that

myopic view ignores the fact that “[p]roperly utilized [pre-filing

consultation rules] promote[] judicial economy while at the same

time reducing litigants’ expenses incurred for attorneys’ time in

briefing issues . . . .” Dondi Props., 121 F.R.D. at 290; see also

Payne v. Britten, 749 F.3d 697, 706 (8th Cir. 2014) (Riley, C.J.,

concurring in part and dissenting in part) (inveighing against

“implication that procedural rules . . . are not worth following

whenever they might appear inexpedient”); Burton v. R.J. Reynolds

Tobacco Co., 203 F.R.D. 624, 626-27 (D. Kan. 2001) (“Without citing

any authority, [the plaintiff’s counsel] argued that the

circumstances of this case were unique and . . . any [pre-filing]

conference among counsel would have been futile . . . . The court

respectfully disagrees. . . . [T]he requirement that counsel

confer about discovery disputes before filing such motions is

4(...continued)

Virginia, No. 7:13CV589, 2019 WL 4741315, at *1 (W.D. Va. Aug. 15,

2019) (unpublished) (quoting Chief Justice John Roberts, “2015

Year-End Report on the Federal Judiciary,”

https://www.supremecourt.gov/publicinfo/year-end/2015year-endrepo

rt.pdf), adopted as modified, 2019 WL 4740241 (W.D. Va. Sept. 27,

2019) (unpublished).

11

mandatory . . . .”); Nevada Power, 151 F.R.D. at 120 (“The purpose

of this [pre-filing consultation] rule is simple: to lessen the

burden on the court and reduce the unnecessary expenditure of

resources by litigants, through promotion of informal,

extrajudicial resolution of discovery disputes.”).

The Court “must also insist on compliance with procedural

rules . . . to promote [its] interest in the uniform administration

of justice.” Anderson v. Hardman, 241 F.3d 544, 545 (7th Cir.

2001). “Doing justice between litigants, after all, hinges as much

on respect for the procedural rules governing the progress of the

lawsuit as on affording parties liberal scope in making their

arguments on the merits.” Coleman v. Frierson, 607 F. Supp. 1566,

1575 (N.D. Ill. 1985); see also Atkins v. Hooper, 979 F.3d 1035,

1052 (5th Cir. 2020) (Costa, J., dissenting in part) (“[F]air

treatment depends on the neutral application of procedural rules.

That evenhandedness is part of what is meant by the ‘rule of law’

or ‘equal justice under law,’ ideals that are guiding lights of our

justice system.”). With that imperative in mind, the Court should

deny the instant Motion, because Defendant’s failure to adhere to

Local Rule 37.1(a), which “ha[s] the force of law,” Hollingsworth

v. Perry, 558 U.S. 183, 191 (2010) (internal quotation marks

omitted), “evidences a lack of respect for the Court and the

judicial process,” Davis v. Wilkie, No. 15CV1521, 2019 WL 1596134,

at *12 (D. Colo. Apr. 15, 2019) (unpublished); see also Collins v.

12

Citty, No. CIV-09-756, 2011 WL 13285137, at *2 (W.D. Okla. Aug. 30,

2011) (unpublished) (“[F]ailure to abide by, and comply with,

[local] rules demonstrates a lack of respect for the judicial

process and hampers this [c]ourt’s ability to exercise its case-

administration authority.” (internal footnote omitted)).

CONCLUSION

The plain language of Local Rule 37.1(a) and “[t]he state of

the record clearly preclude[] the [C]ourt from even considering

whether to grant [Defendant the instant Motion’s requested]

relief,” Burton, 203 F.R.D. at 626-27.°

5 Plaintiff and its California-based counsel, Rohit A. Sabnis

of Burnham Brown, PLLC, should not misconstrue this proposed

determination as an endorsement of their handling of Plaintiff’s

Rule 30(b) (6) deposition. Three points merit mention in that

regard. First, Plaintiff possessed an obligation, “[b]efore or

promptly after the [deposition] notice . . . [wa]s served, ...

[to] confer in good faith about the matters for examination,” Fed.

R. Civ. P. 30(b) (6); waiting until the eve of the deposition to

serve Defendant with (boilerplate) objections to deposition topics

(see Docket Entry 94-3) appears inconsistent with that duty of

good-faith conferral. Further, as Defendant has observed, the

deposition transcript confirms that Mr. Sabnis routinely lodged

“objections [that] directly violated [this] Local Rule[:] .. .

‘Counsel shall not make objections or statements which might

suggest an answer to a witness. Counsels’ statements when making

objections should be succinct, stating the basis of the objection

and nothing more.’” (Docket Entry 95 at 5 n.4 (quoting M.D.N.C. LR

30.1(2))). (See, _ e.g., Docket Entry 94-4 at 13 (“MR. SABNIS:

Vague and ambiguous. .. . [A]nswer to the extent you understand.

THE WITNESS: I_ don’t understand.” (emphasis added)), 14 (MR.

SABNIS: . . . To the extent that you know. THE WITNESS: To the

extent that I know . .. .” (emphasis added)), 25 (“MR. SABNIS:

. . [O]nly if you know. THE WITNESS: I don’t know.” (emphasis

added)), 31 (“MR. SABNIS: To the extent you can understand. And

if you need clarification from counsel, please feel free to ask.

THE WITNESS: Yeah. To my understanding . . . .” (emphasis

(continued...)

13

IT IS THEREFORE RECOMMENDED that (A) the instant Motion

(Docket Entry 94) be denied, and (B) Defendant and its counsel be

made to show cause why they should not “pay [Plaintiff] its

reasonable expenses incurred in opposing the [instant M]otion,

including attorney’s fees,” Fed. R. Civ. P. (5) (B).

/s/_L. Patrick Auld

L. Patrick Auld

United States Magistrate Judge

January 19, 2021

5(...continued)

added)), 48 (“MR. SABNIS: . . . [A]nswer to the extent that you

know . .. . THE WITNESS: To the extent that I know... .”

(emphasis added)), 49 (“MR. SABNIS: .. . [A]nswer to the extent

that you have information on the pleadings and reports .... THE

WITNESS: To the extent that I was made aware of the pleadings and

answers... .” (emphasis added)), 54 (“MR. SABNIS: Based on the

facts. THE WITNESS: Based _on the facts . . . .” (emphasis

added)}.) Misconduct of that sort could result in the revocation

of Mr. Sabnis’s authorization to appear specially in this Court.

See generally Bills v. United States, 11 F. App’x 342, 343 (4th

Cir. 2001) (describing special appearance by out-of-state counsel

as “a privilege” and “‘a matter of grace resting in the sound

discretion of the presiding judge’” (quoting Thomas v. Cassidy, 249

F.2d 91, 92 (4th Cir. 1957))). Finally, the refusal of Plaintiff’s

designee to answer certain questions ultimately may not stand, if

- in adjudicating Defendant’s Motion to Compel Production of

Documents — the Court overrules Plaintiff’s objections to document

requests which mirror its deposition objections. In that event,

the Court likely would authorize another Rule 30(b) (6) deposition

at which (A) Defendant could use documents subject to compelled

production, and (B) Plaintiff could not maintain objections

overruled by the order that compelled production. See generally

Fed. R. Civ. P. (2) (A) (11) (recognizing authority of “court([s

to] grant leave to . . . [depose a] deponent [who] has already been

deposed in the case”). Given that possibility, the parties (and

their counsel) should (strongly) consider conducting a (legitimate)

good-faith conference about their overarching work-product

doctrine/attorney-client privilege dispute(s) for the purpose of

genuinely pursuing a mutually acceptable, carefully calibrated

compromise, rather than just hoping the (at best) rough justice the

Court otherwise would administer will better suit their side.

14