The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
JBS PACKERLAND, INC., JBS S.A.,
JBS USA FOOD COMPANY, and
SWIFT BEEF COMPANY, 8:23CV153
Petitioners,
MEMORANDUM AND ORDER
vs.
NEBRASKA BEEF, LTD.,
Respondent.
Petitioners (hereinafter “JBS”) have filed a motion to compel, for sanctions,
and for a finding of contempt of court. (Filing No. 34). The motion will be granted
in part, as follows.
BACKGROUND
In August of 2022, JBS, as Antitrust Defendants in a Minnesota lawsuit, In
re Cattle and Beef Antitrust Litigation, 0:20-cv-01319 (JRT/JFD) (hereafter
“Minnesota Antitrust litigation”), served a third-party subpoena for document
production on Nebraska Beef. The Antitrust Plaintiffs had previously litigated a
similar subpoena served on Nebraska Beef in this forum. See 8:22-cv-204-JFB-
CRZ. That litigation took over a year to resolve.1 That resolution did not provide
all the documents JBS requests.
On April 18, 2023, the Antitrust Defendants moved to compel Nebraska
Beef’s response to the Antitrust Defendants’ third-party subpoena. Nebraska
1 See 8:22-cv-204-JFB-CRZ, Filing No. 39 for an outline of Nebraska Beef’s delays in that litigation.
Beef did not promptly respond to the motion to compel. On June 8, 2023, the
court entered an order requiring Nebraska Beef to respond to the motion to
compel and/or show cause why it should not be granted as unopposed. (Filing
No. 12). Nebraska Beef filed a brief in opposition to the motion to compel on
June 22, 2023. (Filing No. 13). JBS filed a reply brief and motion for oral
argument on June 29, 2023. (Filing Nos. 15-17). Nebraska Beef opposed the
motion for oral argument. The court set a telephonic hearing on the motion to
compel, to be held on August 1, 2023. (Filing No. 20).
At that hearing, and by written order memorializing the oral rulings, the
court ordered Nebraska Beef to cooperate with and allow JBS and its expert, to:
a. examine Nebraska Beef’s AS400 computer system to prepare a
cost estimate and plan for pulling the transaction-specific cattle
supplier data and related procurement data; and
b. pull the AS400 computer information to obtain documents or
entries which disclose transaction-specific cattle supplier data and
related procurement data, if Petitioners believe the estimate is
reasonable and the information to be obtained is worth the cost.
(Filing No. 24) (hereafter the August 1, 2023 order). The order set a September
8, 2023 deadline for complying. Id. Nebraska Beef appealed the ruling. It was
affirmed on September 1, 2023. (Filing No. 28).
While the appeal was pending, JBS asked to schedule a call with
Nebraska Beef’s counsel and the person he described as the third-party
programmer who had, for two decades, provided technology support for
Nebraska Beef’s AS400 program. JBS asked to schedule onsite access to copy
the AS400 database on September 6, 2023. (Filing No. 36-2).
At the parties’ request, the court extended the deadline for complying with
the August 1, 2023 order to September 22, 2023. As of that date, Nebraska Beef
stated it had found someone knowledgeable with its computer system, and
counsel for the parties and Nebraska Beef’s technology expert were scheduling a
meeting to discuss how to comply with the August 1, 2023 order.
At the parties’ request, the court extended the deadline to October 6, 2023.
(Filing No. 30). Nebraska Beef’s counsel represented that Nebraska Beef was
asking its computer support person to copy the files requested by JBS, and if he
could not, arrangements would be made for JBS’ expert to do so. (Filing No. 36-
3, at CM/ECF p. 2). Nebraska Beef’s technology expert purportedly had travel
difficulties, so the deadline was extended to October 20, 2023. (Filing No. 36-3,
at CM/ECF p. 3). After the Court granted this third extension request, counsel for
the parties met, but the person knowledgeable about Nebraska Beef’s computer
system did not attend. Nebraska Beef’s counsel stated Nebraska Beef believed
the information in its computer system would not be useful; that Nebraska Beef
did not want to produce the information as required under the court’s August 1,
2023 order. JBS’ counsel reiterated that pursuant to the court’s order, JBS was
entitled to the data, and Nebraska Beef either needed to copy the files or provide
the necessary passwords so JBS’ expert could copy the information. (Filing No.
36-1, at CM/ECF pp. 2-3).
The deadline was extended to November 3, 2023. (Filing No. 32).
Counsel for JBS sent emails to Nebraska Beef’s retained and in-house
counsel on October 24, 2023, October 31, 2023, and November 6, 2023. The
October 24, 2023 email stated:
Is the person who runs your computer system (not the data entry
person) able to copy over the data by this Thursday? If not, we will
need to (1) arrange a call between your administrator and our expert
so that they can discuss any passwords and information needed to
access and copy the data, and (2) arrange to have a time for our
expert to copy the data.
We need to complete these actions given the Court’s recent order.
Having heard no response, JBS’ counsel sent a follow up email on October
31, 2023, which stated:
We need to get this done. Nebraska Beef has not cooperated with
having JBS obtain information pursuant to the Court Order. Instead,
you have repeatedly delayed and attempted to argue that the
information isn’t going to be helpful.
Please let us know promptly if you are going to provide a copy of the
information or are going to cooperate by having a knowledgeable
person talk with our expert to provide information needed to copy the
information.
(Filing No. 36-5, at CM/ECF p. 2). When JBS again received no response, its
counsel sent the following email on November 6, 2023:
If you plan to make a copy of the Nebraska Beef data available, we
need to do so by this Wednesday.
If you are going to have it copied by Nebraska Beef’s computer
administrator, we will need to coordinate Tuesday morning to make
sure that the correct data is copied.
If you are going to cooperate to have our expert copy it, we will need
to coordinate Tuesday morning to make sure that we have access to
the system on Wednesday and that the person on your side who
knows the administrative passwords and related information is
available to provide that information before the imaging is done on
Wednesday.
If I don’t hear from you tomorrow morning, we will proceed with
completing a motion consistent with the Court’s recent order.
(Filing No. 36-6, at CM/ECF p. 2).
Nebraska Beef did not respond. On November 13, 2023, JBS filed the
pending motion to compel, for sanctions, and for a finding of civil contempt.
(Filing No. 34).
ANALYSIS
The foregoing timeline is undisputed. Rather than having the computer
data copied as required under August 1, 2023 order, Nebraska Beef tasked its IT
specialist to investigate what data was available and determine if the information
would be useful to JBS. That IT specialist had multiple discussions with
Nebraska Beef’s cattle purchase administrators and financial consultants,
reviewed the information stored in the AS400, and ultimately concluded “the
transaction-specific cattle supplier information is not accurately contained in the
AS400.” (Filing No. 38-2, at CM/ECF p. 5).
Nebraska Beef has stonewalled JBS’ effort to obtain the discovery ordered
by this court. It requested extensions while promising it was preparing to
cooperate with the court-ordered data imaging when, in fact, it was preparing to
essentially relitigate the court’s prior order; gathering witness statements and
evaluating the AS400 data information to argue the data is unreliable, will not
assist the Minnesota litigants, and need not be disclosed. Nebraska Beef has
invested its time and money into repeatedly claiming that due to its intense
competition and the unique structure of its business dealings, it should be
immune from compliance with third-party subpoenas. It argues that its
information is highly confidential, but this court has already addressed that
concern: Any disclosure is subject to the “Attorneys’ Eyes Only” terms of the
protective order in the underlying Minnesota case.
Nebraska Beef repeatedly states it has expended unreasonable amounts
of time in responding to the Antitrust litigants’ subpoenas, complaining “[t]his
litigation has forced Nebraska Beef to engage in massive reallocation of sparse
human resources to educate itself on its outdated cattle procurement information
system programs operating on its AS400 system.” (Filing No. 37, at CM/ECF p.
3). Nebraska Beef created this problem. It admittedly uses outdated technology
to track its multi-million-dollar business2 and claimed to have extreme difficulty
gleaning information from that system for responding to the third-party
subpoenas. But the court now knows Nebraska Beef has a retained or employed
technology consultant who has supported the company’s use of the AS400
system for two decades.3 Prior to November 20, 2023, that person provided no
information to this court, either during the related and protracted litigation of the
third-party subpoena served by the Antitrust Plaintiffs (8:22-cv-204-JFB-CRZ),4 or
during the eight months the above-captioned action has been litigated.
Nebraska Beef’s business model is no doubt unique. But Nebraska Beef is
not above the law. Had Nebraska Beef respected the Federal Rules of Civil
2 Nebraska Beef sells $850 million of beef annually. (8:22-cv-204-JFB-CRZ, Filing No. 11-2, at CM/ECF
p. 2).
3 In response to discovery in 8:22-cv-204-JFB-CRZ, Nebraska Beef objected to producing computerized
information from its AS400 system, explaining “Nebraska Beef does not maintain a complex computer
system nor an IT department. This request is unduly burdensome because it would require Nebraska
Beef to hire an expert in electronic discovery in order to determine if such data is present in its system.”
8:22-cv-204-JFB-CRZ, Filing No, 34, at CM/ECF p. 32.
4 As stated in the court’s order in 8:22-cv-204-JFB-CRZ:
“[A]s of right now, Nebraska Beef has not explained how it uses technology, the extent of
devices, computers, or cloud storage where responsive information may be located, or
the formats of that data. It has not identified, by name, the likely custodians of the
information sought by Plaintiffs’ subpoena. It has not explained whether those custodians
use stand-alone computers or store information on a local network or in cloud storage. It
has, quite frankly, done nothing to assist this court in understanding the burden and cost
it will incur when performing a search for digital information responsive to Plaintiffs’
subpoena.
8:22-cv-204-JFB-CRZ, Filing No, 39, at CM/ECF p. 32.
Procedure by candidly and in good faith conferring with opposing counsel
regarding the subpoenaed information, responding to the third-party subpoenas
by the antitrust litigants, and doing so in a manner that assured the just, efficient,
and inexpensive resolution of the proceedings, its costs could have been limited
and perhaps recovered by court order. Instead, Nebraska Beef’s reticent attitude
has devoured countless hours of court time and delayed the resolution of the
third-party actions in this forum and, no doubt, the Minnesota Antitrust litigation.
Against this backdrop of filibustering, Nebraska Beef now expects the court
and JBS to accept, at face value, that the information within the AS400 is so
inaccurate that JBS should abandon any effort to obtain it, and this court should
not enforce its prior order. I am not convinced.
Under Federal Rule of Civil Procedure 37(b)(2)(A), a district court may
impose sanctions for discovery violations. The court must decide whether the
sanction imposed is just and specifically related to the claim at issue. Baker v.
General Motors Corp., 86 F.3d 811, 817 (8th Cir.1996), rev'd on other grounds,
522 U.S. 222 (1998). Nebraska Beef is not a litigant in the Minnesota Antitrust
Litigation, so sanctions limiting the use of evidence or dismissing claims are
useless in this proceeding. JBS moves for attorney fees and a finding of
contempt. Nebraska Beef’s stance in this case was and is not substantially
justified. Attorney fees will be granted. As to the issue of contempt, the court will
give Nebraska Beef one last and final opportunity to immediately comply with the
August 1, 2023 Order. If it chooses not to, the undersigned Magistrate Judge will
certify Nebraska Beef’s acts or conduct constituting contempt to the assigned
District Judge. 28 U.S.C. § 636(e).
Accordingly,
IT IS ORDERED that JBS’ Motion, (Filing No. 34), is granted, in part, as
follows:
1) On or before December 15, 2023:
a. Nebraska Beef and its IT consultant knowledgeable on the AS400
system, Williams E. Carpenter, Jr., will personally meet with JBS’
counsel and perhaps its expert regarding the imaging of the AS400
for disclosure of the information described in the court’s August 1,
2023 order.
b. Nebraska Beef shall fully explain all information within Mr.
Carpenter’s affidavit. JBS may choose to obtain this information
through informal discussions or by deposing Mr. Carpenter and/or
Nebraska Beef’s 30(b)(6) representative.
2) On or before December 22, 2023, Nebraska Beef will disclose to JBS
the information described in the August 1, 2023 order. JBS may elect to
have Nebraska Beef provide copies of the information, or it may image
the AS400 itself to secure compliance with the order.
3) JBS is entitled reimbursement for its attorney’s fees and expenses
incurred in preparing its Motion to compel, for sanctions, and for a
finding of contempt. As to the assessment of attorney fees and costs:
a. On or before December 15, 2023, JBS shall submit an itemized
billing statement of its fees and expenses associated with the motion
to counsel for Nebraska Beef.
b. Nebraska Beef’s counsel shall respond to this itemization no later
than December 22, 2023, and
i. If Nebraska Beef does not timely respond, the fee request will be
deemed undisputed, and on or before December 27, 2023, JBS
shall file a notice of the fees to be awarded.
ii. If the parties agree as to the amount to be awarded, on or before
December 27, 2023, they shall file a joint stipulation for entry of
an order awarding costs and fees to JBS.
iii. If Nebraska Beef timely objects to JBS’ statement of attorney fees
and costs to be awarded, JBS shall file a motion for assessment
of attorney fees and costs by no later than December 28, 2023.
This motion shall be submitted in accordance with the court’s fee
application guidelines outlined in Nebraska Civil Rules 54.3 and
54.4, but a supporting brief is not required.
iv. If a motion for assessment of fees is required, the court may
award JBS up to an additional $2000.00 to recover the cost of
preparing that motion.
4) No extensions of the dates within this order will be granted absent a
formal hearing and a substantial showing of good cause.
5) Any objection to this order must be filed on or before December 15,
2023.
December 11, 2023.
BY THE COURT:
s/ Cheryl R. Zwart
United States Magistrate Judge