Quantas Healthcare Management LLC v. Sun City Emergency Room LLC

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

QUANTAS HEALTHCARE §

MANAGEMENT, LLC, §

§

Plaintiff/Counter-Defendant, §

§

V. § No. 3:23-cv-891-K

§

SUN CITY EMERGENCY ROOM, §

LLC; and SUN CITY WEST §

EMERGENCY ROOM, LLC, LLC, §

§

Defendants/Counter-Plaintiffs. §

MEMORANDUM OPINION AND ORDER

Defendants and Counter-Plaintiffs Sun City Emergency Room, LLC, d/b/a El

Paso Emergency Room (“El Paso East”) and Sun City West Emergency Room, LLC,

d/b/a El Paso West Emergency Room (“El Paso West”) (collectively, “the ERs”) have

filed an Emergency Motion for Sanctions against Plaintiff and Counter-Defendant

Quantas Healthcare Management, LLC under Federal Rule of Civil Procedure

37(b)(2). See Dkt. No. 66.

The ERs assert that “Quantas has violated [the Court’s] January 29, 2024

Order (the ‘Order’) [Dkt. No. 65]” and ask the Court, as relief,

• “to dismiss with prejudice Quantas’ affirmative claims against

the ERs for trademark infringement, cyberpiracy, unfair

competition, false designation of origin, and unjust enrichment”;

• “order, yet again, that Quantas immediately produce all

non-privileged responsive documents and information requested

by the ERs so that such evidence may be used by the ERs in

connection with their pursuit of their affirmative claims against

Quantas”;

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• “order that Quantas, in defending against the ERs’ claims, is

barred from relying upon any evidence that it failed to produce

by Judge Horan’s February 19, 2024 deadline”;

• “allow the ERs to depose Quantas’ witnesses after the end of the

discovery deadline once it has Quantas’ documents in hand”; and

• “order Quantas to reimburse the ERs for their attorneys’ fees and

costs in bringing their original Motion to Compel (Dkt. 57) and

this Motion for Sanctions.”

Dkt. No. 66 at 4, 5; see also id. at 15.

Quantas filed a response, see Dkt. No. 71, and the ERs filed a reply, see Dkt.

No. 72.

For the reasons and to the extent explained below, the Court grants in part

and denies in part the ERs’ Emergency Motion for Sanctions [Dkt. No. 66].

Background

In the January 29, 2024 Electronic Order granting in part and denying in part

the ERs’ Motion to Compel Discovery [Dkt. No. 65], the Court explained and ordered

that

[t]he ERs ask the Court to overrule Quantas’s discovery objections and

order Quantas to (i) collect and produce non-privileged documents in

response to the ERs’ requests for production, (ii) supplement with

meaningful answers its responses to the ERs’ interrogatories and

requests for admission, and (iii) produce an updated privilege log. More

specifically, the ERs as the Court (1) to compel Quantas to produce

documents responsive to the ERs’ Requests for Production Nos. 1-46; (2)

compel Quantas to fully respond to Interrogatory Nos. 1-2 and 5; and (3)

compel Quantas to fully respond to Request for Admission Nos. 21, 38,

and 39.

The Court has laid out the standards that govern a Federal Rule

of Civil Procedure 37(a) motion to compel as to Federal Rule of Civil

Procedure 34 requests for production and Federal Rule of Civil

Procedure 33 interrogatories, and the Court incorporates and will apply

– but will not repeat – those standards here. See VeroBlue Farms USA

Inc. v. Wulf, ___ F.R.D. ____, No. 3:19-cv-764-X, 2021 WL 5176839, at

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*5-*9 (N.D. Tex. Nov. 8, 2021); Lopez v. Don Herring Ltd., 327 F.R.D.

567, 573-86, 588-90 (N.D. Tex. 2018).

Quantas responded to most, if not all, of the requests at issue

“[s]ubject to and without waiving the foregoing objections” or “[s]ubject

to and without waiving the above general and specific objections.” But

responding “‘subject to’ and ‘without waiving’ objections is improper, as

the undersigned and many other judges in this circuit and elsewhere

have now made clear for several years.” VeroBlue, 2021 WL 5176839, at

*8 (cleaned up).

As for Quantas’s objections to RFP Nos. 1-46, the Court, will, for

efficiency’s sake, address each of the objections by type based on the

Court’s review of the parties’ briefing and Quantas’s original and

supplemental objections and responses.

The Court overrules the objections asserting that “much of the

requested documentation is already in Defendants’ possession” or that

“much of the requested documentation and information is publicly

available and already in Defendants’ possession,” where experience

teaches that the same request for communications or agreements

between individuals or entities may yield different results when

directed to both parties to the communication or agreement. Under the

circumstances of each of the requests to which Quantas objects on this

ground which do not appear to encompass documents that would be

publicly available – the Court finds that Quantas has not established

that the requested discovery should be precluded because it “can be

obtained from some other source that is more convenient, less

burdensome, or less expensive.” Fed. R. Civ. P. 26(b)(2)(C)(i). And,

otherwise, “the Federal Rules do not afford a party the option of

refusing to produce discovery on the basis that [it] believes that the

requesting party is already in possession of the requested discovery. “

Henderson v. Wells Fargo Bank, N.A., No. 3:13CV378 (JBA), 2017 WL

684439, at *4 (D. Conn. Feb. 21, 2017); cf. VeroBlue, 2021 WL 5176839,

at *27 (“It has long been a rule of discovery practice that a party can

seek information to which he already knows the answer, and a party is

not automatically precluded from propounding an interrogatory request

to which he already knows the answer, although Federal Rule of Civil

Procedure 26(c) grants this Court the power to protect a party or person

from any unduly burdensome discovery.” (cleaned up)).

The Court overrules the objections asserting that a request “does

not have a temporal limit.” As the ERs explain, their requests include

the instruction that “[u]nless otherwise specifically stated, the relevant

time period for these requests is January 1, 2017, to the present.” And

Quantas raised this objection to, for example, RFP No. 7, which does

otherwise specifically state a time period.

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The Court overrules the objections asserting that requests are

“lacking in ‘reasonable particularity’ as required by Rule 34.” “The test

for reasonable particularity is whether the request places the party

upon reasonable notice of what is called for and what is not. Therefore,

the party requesting the production of documents must provide

sufficient information to enable [the party to whom the request is

directed] to identify responsive documents. The goal is that the

description be sufficient to apprise a man of ordinary intelligence which

documents are required..... A Rule 34(a) request made with reasonable

particularity does not require a reasonable attorney or party attempting

to properly respond to ponder and to speculate in order to decide what

is and what is not responsive.” Lopez, 327 F.R.D. at 575-76, 577

(cleaned up). The requests to which Quantas objects satisfy this

standard.

The Court overrules the objections asserting that the ERs’

“incorporation of the ‘All’ or ‘All documents’ terms into the Requests is

inherently overbroad and not reasonably tailored.” Under the

circumstances of each of the requests to which Quantas objects on this

ground, the Court finds that Quantas has not established that the

discovery request is overbroad considering the context of what is

sought. But the Court agrees with Quantas that some of the requests

seeking documents that “relate to” a location or other matter go too far

to the point of bring overbroad and failing the reasonable particularity

standard. The Court MODIFIES RFP Nos. 7, 11-12, 14-23, 25-28, and

30-32 to change “mention, refer, or relate to” or “mention, refer to, or

relate to” to “mention or refer to”; RFP No. 24 to change “mention, refer

to, relate to, or reflect” to “mention, refer to, or reflect”; and RFP No. 29

to change “refer or relate to” to “refer to.”

The Court overrules the objections on relevance grounds because,

“[u]nder Rule 26(b)(1), [u]nless otherwise limited by court order,...

[p]arties may obtain discovery regarding any nonprivileged matter that

is relevant to any party’s claim or defense and proportional to the needs

of the case. To be relevant under Rule 26(b)(1), a document or

information need not, by itself, prove or disprove a claim or defense or

have strong probative force or value.” Lopez, 327 F.R.D. at 573 (cleaned

up). Quantas has not explained how the objected-to responses seek

documents that are not relevant to its claims or the ERs’ defenses

under this standard, and the burden lies with Quantas to do so to resist

discovery. See Baker v. Walters, 652 F. Supp. 3d 768, 778 (N.D. Tex.

2023).

The Court overrules the objections to RFP Nos. 38 and 46 –

seeking “Quantas’ tax returns for each of the last five years” and “[a]ll

Documents and Communications related to any attempt by Quantas to

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use the Sun City Mark or Sun City Logo in the El Paso market since

April 1, 2023” on the unexplained and apparently inapplicable ground

that each request “is premature in that Plaintiff is still preparing their

case.” A party cannot refuse to comply with an opposing party’s

discovery requests “simply because he believes that the opposing

parties ha[ve] not fully complied with his discovery requests to them.”

Turner v. Nationstar Mortg. LLC, No. 3:14-cv-1704-L-BN, 2015 WL

11120879, at *2 (N.D. Tex. May 14, 2015). Neither can a party delay

responding to discovery requests on the ground that it has not yet

served its own discovery on the requesting parties.

As to Quantas’s objections based on attorney-client privilege or

work product protection, as the Court has explained, by definition,

“[t]he scope of discovery in civil cases under Federal Rule of Civil

Procedure 26(b)(1) does not include privileged information or, absent

the showing that Federal Rule of Civil Procedure 26(b)(3) mandates,

work product protected information.” Jolivet v. Compass Grp. USA,

Inc., 340 F.R.D. 7, 17 (N.D. Tex. 2021) (cleaned up). Quantas, as parties

often do, made specific objections to the ERs’ Rule 34(a) request for

production “to the extent it seeks to invade attorney-client privilege,

work product immunity, or other applicable privileges.” But those

objections do not, alone, fulfill the withholding party’s obligations that

Federal Rule of Civil Procedure 26(b)(5)(A) imposes.

“Because the responding party is entitled to refuse to produce

requested discovery if it is privileged or work product protected, the

rules require that, [w]hen a party withholds information otherwise

discoverable by claiming that the information is privileged or subject to

protection as trial-preparation material, the party must: (i) expressly

make the claim; and (ii) describe the nature of the documents,

communications, or tangible things not produced or disclosed – and do

so in a manner that, without revealing information itself privileged or

protected, will enable other parties to assess the claim, Fed. R. Civ. P.

26(b)(5)(A).” Jolivet, 340 F.R.D. at 20 (cleaned up); accord Heller v. City

of Dallas, 303 F.R.D. 466, 486 (N.D. Tex. 2014) (“To comply with the

requirements to support withholding any responsive document or

information as privileged or protected work product, a privilege log or

equivalent document complying with Federal Rule of Civil Procedure

26(b)(5)(A)’s requirements must be produced for any documents,

communications, or other materials withheld from production on the

grounds of attorney-client privilege, work product, or other privilege,

immunity, or protection. Accordingly, a party may properly raise and

preserve an objection to production of documents in response to a

specific document request or interrogatory by objecting ‘to the extent’

that the requests seeks privileged materials or work product, so long as

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the responding party also provides the information required by Rule

26(b)(5)(A).”).

“This is often accomplished through a privilege log. [A]lthough

Rule 26 does not attempt to define for each case what information must

be provided, a privilege log’s description of each document and its

contents must provide sufficient information to permit courts and other

parties to test[] the merits of the privilege claim. Typically, a privilege

log must identify each document and provide basic information,

including the author, recipient, date and general nature of the

document.” Jolivet, 340 F.R.D. at 20-21 (cleaned up).

The Court orders that Quantas must, by February 19, 2024,

serve on the ERs’ counsel complete responses (without objections) to

Requests for Production Nos. 1-46 (as modified above) and produce all

unproduced documents and electronically stored information that are

responsive to those requests and that are in Quantas’s possession,

custody, or control, consistent with the rulings above and in compliance

with Federal Rule of Civil Procedure 34(b)’s requirements, see Lopez,

327 F.R.D. at 575-79, and serve an updated, supplemental privilege log

that complies with Federal Rule of Civil Procedure 26(a)(5)’s

requirements.

Turning to the interrogatories at issue, Interrogatory No. 1 asks

Quantas to “[i]dentify each category of monetary damage You contend

You suffered as a result of the ERs’ use of the Sun City Word Mark,

including in your answer the exact nature and amount of each category

of harm allegedly suffered”; Interrogatory No. 2 asks Quantas to

“[i]dentify each category of monetary damage You contend You have

suffered as a result of the ERs’ use of the Sun City Logo, including in

your answer the exact nature”; and Interrogatory No. 5 asks Quantas to

“[i]f You contend that Matthew Rinaldi was authorized to execute the

Trademark Assignment on behalf of El Paso East, please identify the

person(s) who authorized Mr. Rinaldi to execute the Trademark

Assignment and the Communication or Document through which such

authorization was provided.” Quantas objected to and answer each of

these interrogatories by “assert[ing] that this Request is premature in

that Plaintiff is still preparing their case; accordingly, Plaintiff will

supplement when necessary and stating that “Plaintiff will supplement

as more information becomes available.”

Under Rule 33, Quantas is required to pull together complete

answers by “reviewing all sources of responsive information reasonably

available to [Quantas] and providing the responsive, relevant facts

reasonably available to” Quantas. Lopez, 327 F.R.D. at 579 (cleaned

up). The Court, after considering the briefing, is persuaded that

Quantas has not done to the extent that it should be able to at this

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point. The Court orders Quantas to, by February 19, 2024, serve on

Defendants’ counsel complete answers – without objections – to

Interrogatory Nos. 1, 2, and 5, consistent with the rulings above and in

compliance with Federal Rule of Civil Procedure 33’s requirements. See

Lopez, 327 F.R.D. at 579-81.

But Federal Rule of Civil Procedure 37 does not provide for a

motion to compel answers to Federal Rule of Civil Procedure 36

requests for admission. See VeroBlue, 2021 WL 5176839, at *4. Once

the answering party has served answers or objections, Rule 36(a)(6)

provides that “[t]he requesting party may move to determine the

sufficiency of an answer or objection” and that, “[u]nless the court finds

an objection justified, it must order that an answer be served” and, “[o]n

finding that an answer does not comply with this rule, the court may

order either that the matter is admitted or that an amended answer be

served.” FED. R. CIV. P. 36(a)(6).

“Where the party to whom a Rule 36 request is directed serves on

the requesting party a written answer or objection, Rule 36(a)(4)

requires that, ‘[i]f a matter is not admitted, the answer must

specifically deny it or state in detail why the answering party cannot

truthfully admit or deny it.’ Fed. R. Civ. P. 36(a)(4). ‘A denial must

fairly respond to the substance of the matter; and when good faith

requires that a party qualify an answer or deny only a part of a matter,

the answer must specify the part admitted and qualify or deny the rest.’

Id. Further, ‘[t]he answering party may assert lack of knowledge or

information as a reason for failing to admit or deny only if the party

states that it has made reasonable inquiry and that the information it

knows or can readily obtain is insufficient to enable it to admit or

deny.’” VeroBlue, 2021 WL 5176839, at *4 (cleaned up).

But “the Court will treat [a Rule 37(a) motion to compel] as

appropriate as a Federal Rule of Civil Procedure 36(a)(6) motion to

determine the sufficiency of answers and objections to Rule 36 requests

for admission” and will do here. Campos v. HMK Mortg., LLC, No.

3:18-cv-1362-X, 2019 WL 7842434, at *2 (N.D. Tex. Dec. 26, 2019)

(cleaned up). The ERs ask the Court to order Quantas to fully respond

to three of the requests for admission. And, under Rule 36(a)(6) if an

objection is not justified or an answer does not comply with Rule 36(a),

the Court may order that an amended answer be served.

RFA No. 21 asks Quantas to “[a]dmit that Dr. Robert Phelan is

the only individual who had access to the ERs’ Google Business profiles

from their inception until April 20, 2023”; RFA No. 38 asked Quantas to

“[a]dmit that Dr. Robert Phelan withdrew funds from the ERs’ bank

account(s) on or after April 10, 2023”; and RFA No. 39 asks Quantas to

“[a]dmit that Dr. Robert Phelan instructed Quantas employees to

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redirect mail from the ERs to Quantas on or after April 10, 2023.”

Quantas objected and responded to each RFA by stating that “[t]he

Request is premature as the Plaintiff is still developing its case;

accordingly, Plaintiff will supplement once discovery has occurred and

more information is known.”

In its response to the MTC, Quantas attempts to justify this

“premature” objection for RFA No. 21 but offers no explanation as to

RFA Nos. 38 or 39. And the Court could not sustain this objection as to

RFA Nos. 38 and 39 in any event, where they each ask only about

conduct by Dr. Phelan.

As for RFA No. 21, “[o]n the Court’s reading of Rule 36(a)(4)’s

text’s plain meaning, a party can sufficiently ‘state in detail why the

answering party cannot truthfully admit or deny it’ by ‘assert[ing] lack

of knowledge or information as [the] reason for failing to admit or deny’

and ‘stat[ing] that it has made reasonable inquiry and that the

information it knows or can readily obtain is insufficient to enable it to

admit or deny.’ Fed. R. Civ. P. 36(a)(4).” VeroBlue, 2021 WL 5176839, at

*18 (cleaned up). “And nothing in Rule 36 requires an answering party

to – after stating that the answering party ‘has made a reasonable

inquiry and that the information it knows or can readily obtain is

insufficient to enable it to admit or deny’ – further ‘state in detail the

efforts made in conducting its ‘reasonable inquiry.’” Id. at *21 (cleaned

up). But Quantas has not done any of that or claimed that it has

already made the required reasonable inquiry.

The Court finds that the objections and responses to RFA Nos.

21, 38, and 39 are not justified or proper under Rule 36 and orders

Quantas to serve amended answers to these requests, in compliance

with Rule 36’s standards, by February 19, 2024.

Finally, the Court finds that, under Federal Rules of Civil

Procedure 36(a)(6) and 37(a)(5), considering all of the circumstances

here and the Court’s rulings, the parties will bear their own expenses,

including attorneys’ fees, in connection with this motion.

Dkt. No. 65.

The ERs explain that they

bring this Motion for Sanctions against Quantas because Quantas has

violated Judge Horan’s January 29, 2024 Order (the “Order”). See Dkt.

No. 65. Indeed, after overruling effectively all of Quantas’ discovery

objections, Judge Horan ordered Quantas to produce, by February 19,

2024, “all unproduced documents and electronically stored information

that are responsive to [the ERs’] requests and that are in Quantas’s

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possession, custody, or control.” The ERs now have no choice but to seek

sanctions because Quantas failed to produce a single additional

document by Judge Horan’s deadline, and that total failure is wreaking

havoc on the ERs’ ability to prepare for and complete multiple essential

depositions by the impending discovery deadline – which is just one

month away.

In addition to failing to collect and produce all responsive

documents, Quantas failed to comply with other aspects of Judge

Horan’s Order too. For example, although Judge Horan ordered

Quantas to produce a privilege log by February 19, 2024, Quantas did

not do so. Further, although Quantas provided “supplemental” answers

to certain Interrogatories, those supplemental answers remain – in

most respects – evasive and unresponsive.

Quantas’ near-total failure to cooperate in the discovery process

has materially impede the ERs’ ability to fairly prepare its claims and

defenses in this case. For instance, the ERs noticed Quantas’ corporate

representative’s deposition for February 28, 2024, but Quantas’

continued delays in producing any responsive documents now make

that date an impossibility. Moreover, as discovery closes entirely next

month, Quantas’ delay tactics have left the ERs with virtually no time

to review whatever documents Quantas may produce in the future,

prepare for the multiple depositions that must be taken, and schedule

and take those depositions with documents in hand. This is

fundamentally unfair to the ERs.

Dkt. No. 66 at 4-5.

As background to their sanctions motion, the ERs explain that

Quantas filed this lawsuit ten months ago (see Dkt. 1), accusing the

ERs of trademark infringement of a brand name and logo that were no

longer in use by either party. See generally Dkts. 17, 53 (opposing

Quantas’ requests for injunctive relief on a similar basis). The ERs also

filed counterclaims against Quantas. Dkt. 13. The ERs’ counterclaims

arise from various acts of self-dealing and breaches of contract

perpetrated by the two principals of Quantas during the time period

when Quantas and those two individuals were also managing the ERs.

See Dkt. 13.

Seeing information relevant to both Quantas’ and the ERs’

competing claims, the ERs promptly propounded discovery to Quantas

in August 2023. Dkt. 57-1 at App. 9-36. One day before Quantas’

deadline to respond to the ERs’ discovery, Quantas requested an

additional onemonth extension to “assemble responsive information and

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documents and prepare [Quantas’] response.” Dkt. 53-1 at App. 379.

This proved to be the first of many extensions the ERs would grant

Quantas. See Dkt. 57 at 3 (summarizing same). Yet, despite the now

over six months Quantas has had to prepare its written responses and

gather responsive documents, Quantas has produced exactly one

responsive email. Dkt. 63 at 2. The remainder of the 620 pages Quantas

has produced thus far have been overwhelmingly irrelevant, including

over 500 pages of documents related to trademarks and emergency

room facilities that are not in dispute in this litigation. Id. at 2-4.

Quantas’ failure to collect relevant communications from its

custodians culminated in the ERs’ First Motion to Compel on December

7, 2023. Dkt. 57. This Court subsequently granted that Motion in

almost all respects on January 29, 2024, and ordered Quantas to, by

February 19, 2024: (1) serve complete responses (without objections) to

the ERs’ Requests for Production Nos. 1-46 (as modified by the Court’s

Order) and produce all unproduced documents and electronically stored

information responsive to those requests in Quantas’ possession,

custody, or control, along with an updated, supplemental privilege log;

(2) serve complete answers (without objections) to the ERs’

Interrogatory Nos. 1, 2, and 5; and (3) serve amended answers to the

ERs’ RFA Nos. 21, 38, and 39. Dkt. 65.

On Quantas’ deadline for compliance, it served supplemental

responses to the ERs’ RFAs and Interrogatories (without a verification).

App. 003-023. Yet Quantas’ supplemental responses to the

Interrogatories remain unresponsive. For example, in response to

Interrogatory No. 2 (which sought a description of the types and

amounts of damages sought by Quantas), Quantas once again refused

to answer, stating that although the information was within its own

possession, it would supplement later as more information becomes

available. App. 021-022. This answer is nothing more than a naked

refusal to comply with Judge Horan’s Order. The supplemental

response to Interrogatory No. 5 is just as bad. Interrogatory No. 5 posits

a critically relevant question in this case: What human being

authorized Quantas’ in-house lawyer to execute the trademark

assignment that is the lynchpin of Quantas’ trademark claims? Yet

Quantas’ answer is classically evasive. It states only: “Matt Rinaldi was

authorized to sign the Trademark Assignment in his role as General

Counsel to El Paso East.” App. 022-023. That statement does not tell

the ERs’ who authorized him to execute it, which is what the

Interrogatory asked.

Beyond these continually evasive Interrogatory answers,

Quantas failed to serve amended responses to the ERs’ Requests for

Production or produce even a single additional page of responsive

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material, citing “collection/processing issues on the responsive

documents.” App. 003. Nor did it provide the required privilege log that

Judge Horan ordered by produced.

Discovery closes in this case in roughly a month. Dkt. 26.

Dispositive motions are due in a month and a half, on April 8, 2024. Id.

Yet, the ERs have been unable to take any depositions because they

have not received any of the substantive evidence they need to take

depositions. Quantas’ dilatory discovery conduct in this case has

significantly prejudiced the ERs, and it should be sanctioned

accordingly.

….

Quantas’ egregious discovery conduct in this case warrants

dismissal of its affirmative claims against the ERs with prejudice.

Quantas has acted willfully in refusing to collect and produce relevant

documents, its conduct has substantially prejudiced the ERs’ ability to

prepare for trial, and, in view of Quantas’ repeated failures to comply

with its discovery obligations, lesser sanctions will not suffice.

But, should the Court determine dismissal is a premature

sanction, the Court should alternatively preclude Quantas from

presenting evidence at trial that it should have produced by February

19, 2024 pursuant to the deadline imposed in the Court’s Order on the

ERs’ Motion to Compel. See Dkt. 65. In either case, the ERs are

additionally entitled to recover their reasonable attorney’s fees incurred

in connection with their First Motion to Compel (Dkt. 57) and this

Motion for Sanctions.

Dkt. No. 66 at 6-7. 9-10.

Quantas responds that the Court should deny the sanctions motion “because:

(1) any alleged nondisclosure is not the result of willful and/or bad faith dealing; (2)

Defendants’ alleged prejudice of any alleged nondisclosure is overstated; and (3) the

sanctions Defendants seek are extraordinary and unjustified.” Dkt. No. 71 at 1.

According to Quantas, the ERs’ sanctions motion

arises from [the ERs’] allegations that Quantas is engaging in conduct

to willfully, and in bad faith, withhold from disclosure responsive

documents and providing unresponsive and/or evasive admissions and

answers to interrogatories.

Defendants brought their original Motion to Compel Discovery on

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December 7, 2023 (Dkt. 57). This Court entered a text order granting in

part and denying in part the relief Quantas requested (Dkt. 65)

(“Order”). Specifically, it found nearly half of Defendants’ Requests for

Production (“RFPs”) overbroad, not stated with particularity, and

modified such requests accordingly. See Dkt. 65. The Order also set a

date of February 19, 2024, for Quantas to provide updated responses to

Defendants’ discovery requests.

On February 19, 2024, Quantas submitted supplemental

responses to Defendants interrogatories (“ROGs”) and requests for

admissions (“RFAs”) in accordance with the Court’s Order. See Dkt. 66,

at App. 3. Particularly, Quantas notified Defendant of

“collection/processing issues” and that such would be resolved and the

documents produced later that week. Id. The very next day, February

20, 2024, Defendants filed this instant Motion seeking sanctions

against Quantas.

Quantas has produced further documents to Defendants since

the filing of this Motion. (See Ex. E, at Appx 019). In its supplemental

response, Quantas produced 385 documents that were responsive to

RFP Nos. 1-12, 18-20, 23-35, 37-38, 40-42, and 45.

Dkt. No. 71 at 1-2.

The ERs reply that,

[s]ince the ERs filed their Emergency Motion for Sanctions (the

“Motion”) (Dkt. 66), Quantas’ discovery failures have worsened. Indeed,

the ERs had long been scheduled to depose Quantas’ corporate

representative on document preservation, collection, and production

issues on Wednesday, February 28 – but when the date finally came,

Quantas failed to make a witness available. As a result, the ERs have

been deprived of the opportunity to test the veracity of the excuses

Quantas now offers for its violations of this Court’s January 29 Order

(Dkt. 65).

There is no mystery as to why Quantas cancelled the deposition.

The truth is that Quantas has still, to this day, not conducted any

meaningful collection of e-mails, text messages, or other types of

documents in this case. It has been seven months since the ERs

requested basic document discovery, and Quantas has produced a grand

total of only seven e-mails. It has produced no text messages or

WhatsApp messages (an app these parties use to communicate with one

another). And it has refused to tell the ERs – much less this Court –

whether it ever will collect and produce such materials, despite having

been ordered to do so. With discovery closing this month, the parties

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have come to the end of the road. Quantas must be held accountable for

its bad faith conduct and its violations of this Court’s Order.

Dkt. No. 72 at 1-2.

Legal Standards

Federal Rule of Civil Procedure 37(b)(2)(A) provides that, “[i]f a party ... fails

to obey an order to provide or permit discovery, ... the court where the action is

pending may issue further just orders. They may include the following:

(i) directing that the matters embraced in the order or other

designated facts be taken as established for purposes of the

action, as the prevailing party claims;

(ii) prohibiting the disobedient party from supporting or opposing

designated claims or defenses, or from introducing designated

matters in evidence;

(iii) striking pleadings in whole or in part;

(iv) staying further proceedings until the order is obeyed;

(v) dismissing the action or proceeding in whole or in part;

(vi) rendering a default judgment against the disobedient party; or

(vii) treating as contempt of court the failure to obey any order except

an order to submit to a physical or mental examination.

FED. R. CIV. P. 37(b)(2)(A)(i)-(vii).

Rule 37(b)(2)(C) further requires that, “[i]nstead of or in addition to the orders

[described under Rule 37(b)(2)(A)], the court must order the disobedient party, the

attorney advising that party, or both to pay the reasonable expenses, including

attorney’s fees, caused by the failure, unless the failure was substantially justified or

other circumstances make an award of expenses unjust.” FED. R. CIV. P. 37(b)(2)(C).

“A party’s discovery conduct is found to be ‘substantially justified’ under Rule

37 if it is a response to a ‘genuine dispute, or if reasonable people could differ as to

the appropriateness of the contested action.’’” S.E.C. v. Kiselak Capital Grp., LLC,

-13-

No. 4:09-cv-256-A, 2012 WL 369450, at *5 (N.D. Tex. Feb. 3, 2012) (quoting Devaney

v. Continental Am. Ins. Co., 989 F.2d 1154, 1163 (11th Cir. 1993) (in turn quoting

Pierce v. Underwood, 487 U.S. 552, 565 (1988))). “The burden rests on the party who

failed to comply with the order to show that an award of attorney’s fees would be

unjust or that the opposing party’s position was substantially justified.” Id. at *3

(cleaned up).

The undersigned has authority to enter a nondispositive order granting

attorneys’ fees or other nondispositive sanctions under Federal Rule of Civil

Procedure 37(b) or denying a request for what might be considered a dispositive

sanction. See 28 U.S.C. § 636(b); Merritt v. Int’l Bhd. of Boilermakers, 649 F.2d 1013,

1016-17 (5th Cir. Unit A 1981) (per curiam) (a magistrate judge has authority to

enter a nondispositive order granting attorneys’ fees as a sanction under Federal

Rule of Civil Procedure 37); Siegel v. Compass Bank, No. 3:18-cv-1023-X, 2021 WL

4498914, at *1 (N.D. Tex. Jan. 11, 2021) (“To determine whether a referred motion

for sanctions is dispositive or non-dispositive, the sanction chosen by the magistrate

judge, rather than the sanction sought by the party, governs the determination of

whether Rule 72(a) or 72(b) applies. To allow otherwise would permit the party

seeking sanctions to engage in a game of labels that would improperly dictate the

standard of review.” (cleaned up)); Brown v. Bridges, No. 3:12-cv-4947-P, 2015 WL

410062, at *1-*4 (N.D. Tex. Jan. 30, 2015) (explaining that, when a district judge

refers a motion for sanctions to a magistrate judge, the sanction chosen by the

magistrate judge, rather than the sanction sought by the party, governs the

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determination of whether Federal Rule of Civil Procedure 72(a) or 72(b) applies and

that, when the magistrate judge finds that dismissal or another sanction disposing of

a claim or defense is unwarranted, the motions should be characterized as

non-dispositive and may be ruled on by the magistrate judge) (followed in Green

Hills Dev. Co., LLC v. Credit Union Liquidity Servs., LLC, No. 3:11-cv-1885-L-BN,

Dkt. No. 373 at 2 (N.D. Tex. Dec. 1, 2016)).

Rule 37(b) “is designed to empower the court to compel production of evidence

by the imposition of reasonable sanctions.” Dorsey v. Acad. Moving & Storage, Inc.,

423 F.2d 858, 860 (5th Cir. 1970). “Sanctions under Rule 37 serve the dual function

of reimbursing the moving party and deterring the violator of the discovery orders

(as well as other potential violators).” Day v. Allstate Ins. Co., 788 F.2d 1110, 1114

(5th Cir. 1986).

Rule 37(b)(2) “empowers the courts to impose sanctions for failures to obey

discovery orders. In addition to a broad range of sanctions, including contempt,

[Rule] 37(b)(2) authorizes the court to impose a concurrent sanction of reasonable

expenses, including attorney’s fees, caused by the failure to obey a discovery order.”

Smith & Fuller, P.A. v. Cooper Tire & Rubber Co., 685 F.3d 486, 488 (5th Cir. 2012)

(cleaned up); see also Chilcutt v. United States, 4 F.3d 1313, 1322 n.23 (5th Cir.

1993) (“Rule 37(b) clearly indicates that district courts have authority to grant a

broad spectrum of sanctions.”).

“The district court has broad discretion under Rule 37(b) to fashion remedies

suited to the misconduct.” Smith, 685 F.3d at 488 (cleaned up). “This discretion,

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however, is limited” based on the type of sanctions imposed. Id.

The United States Court of Appeals for the Fifth Circuit has explained that its

“caselaw imposes a heighted standard for litigation-ending sanctions (sometimes

called ‘death penalty’ sanctions). For a lesser sanction, we broadly require the

district court to determine the sanctions are ‘just’ and ‘related to the particular

‘claim’ which was at issue in the order to provide discovery.’” Law Funder, L.L.C. v.

Munoz, 924 F.3d 753, 758 (5th Cir. 2019) (cleaned up).

The sanction imposed should be the least severe sanction adequate to achieve

the proper functions of Rule 37(b)(2) under the particular circumstances. See Smith,

685 F.3d at 488-90.

And the Fifth Circuit recently repeated its guidance that, “to levy a

litigation-ending sanction for a discovery violation, the court must make four

findings. First, the violation reflects bad faith or willfulness. Second, the client, not

counsel, is responsible for the violation. Third, the violation substantially prejudiced

the opposing party. Fourth, a lesser sanction would not substantially achieve the

desired deterrent effect.” Vikas WSP, Ltd. v. Econ. Mud Prod. Co., 23 F.4th 442, 454

(5th Cir. 2022) (cleaned up); accord Nissho-Iwai Am. Corp. v. Kline, 845 F.2d 1300,

1304 (5th Cir. 1988) (“We have repeatedly emphasized that a dismissal with

prejudice is a ‘draconian’ remedy, or a ‘remedy of the last resort,’ to be employed only

when the failure to comply with the court’s order results from wilfullness or bad

faith rather than from an inability to comply. Nevertheless, deliberate, repeated

refusals to obey discovery orders have been held to warrant the use of this ultimate

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sanction.” (cleaned up)); Batson v. Neal Spelce Assocs., Inc., 765 F.2d 511, 514 (5th

Cir. 1985) (“[D]ismissal is authorized only when the failure to comply with the

court’s order results from willfulness or bad faith, and not from the inability to

comply.”).

But “[l]esser sanctions do not require a finding of willfulness.” Smith, 685 F.3d

at 488. “Of course, the flagrancy of a party’s behavior must be directly proportionate

to the severity of the sanction imposed,” but “the lack of willful, contumacious, or

prolonged misconduct [does not] prohibit[] all sanctions.” Chilcutt, 4 F.3d at 1322

n.23. Even where a party was “unable to comply with the discovery requests, the

district court still ha[s] broad discretion to mete out a lesser sanction than

dismissal.” Id. (cleaned up).

That is because “the type of conduct displayed by a party had no bearing on

whether sanctions should be imposed, but only on the type of sanctions imposed,”

and “[t]he willfulness or good faith of [a party], can hardly affect the fact of

noncompliance and [is] relevant only to the path which the District Court might

follow in dealing with [the party’s] failure to comply.” Id. (cleaned up).

Analysis

I. Quantas violated the Court’s January 29, 2024 Electronic Order.

In the January 29, 2024 Electronic Order, the Court ordered that “Quantas

must, by February 19, 2024,”

• “serve on the ERs’ counsel complete responses (without

objections) to Requests for Production Nos. 1-46 (as modified [by

the Court]) and produce all unproduced documents and

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electronically stored information that are responsive to those

requests and that are in Quantas’s possession, custody, or

control, consistent with the rulings above and in compliance with

Federal Rule of Civil Procedure 34(b)’s requirements, see Lopez,

327 F.R.D. at 575-79, and serve an updated, supplemental

privilege log that complies with Federal Rule of Civil Procedure

26(a)(5)’s requirements,”

• “serve on Defendants’ counsel complete answers – without

objections – to Interrogatory Nos. 1, 2, and 5, consistent with the

rulings above and in compliance with Federal Rule of Civil

Procedure 33’s requirements,” and

• “serve amended answers to [Request for Admission Nos. 21, 38,

and 39], in compliance with Rule 36’s standards.”

Dkt. No. 65.

The ERs contend that Quantas violated the Electronic Order’s requirements

because,

• on February 19, 2024, Quantas “served supplemental responses to the

ERs’ RFAs and Interrogatories (without a verification),” but “Quantas’

supplemental responses to the Interrogatories remain unresponsive”;

• on February 19, 2024, “Quantas failed to serve amended responses to

the ERs’ Requests for Production or produce even a single additional

page of responsive material, citing ‘collection/processing issues on the

responsive documents’”;

• on February 19, 2024, Quantas did not “provide the required privilege

log that Judge Horan ordered by produced”;

• on February 27, 2024, “[e]ight days after the Court-ordered production

deadline, Quantas finally served its Second Supplemental Responses

and Objections to Defendant’s First Requests for Production and a

corresponding document production”;

• “Quantas’s supplemental production contains a mere 42 documents,

only 37 of which were unique” and “[o]nly three of those documents

were emails”;

• “[n]o other communications were produced, even though the ERs have

personal knowledge that the doctors frequently used text and

WhatsApp to communicate prior to their separation from Quantas”;

• “[t]he production otherwise consisted largely of documents that are

already in the ERs’ possession – such as the ERs’ Company Agreement,

Medical Director Services Agreement, and Master Services Agreement

with Quantas – as well as undated screenshots of the ERs’ former

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website and undated photos of the Sun City logo on signage and office

supplies”;

• “Quantas has still, [as of March 4, 2024], not conducted any meaningful

collection of e-mails, text messages, or other types of documents in this

case” or “collected any material number of e-mails, WhatsApps, or text

messages,” where “[i]t has been seven months since the ERs requested

basic document discovery, and Quantas has produced a grand total of

only seven e-mails,” “has produced no text messages or WhatsApp

messages (an app these parties use to communicate with one another),”

and “has refused to tell the ERs – much less this Court – whether it

ever will collect and produce such materials, despite having been

ordered to do so”; and

• “Quantas, by all indications, still has not collected communications

from its own custodians.”

Dkt. No. 66 at 7 (cleaned up); Dkt. No. 72 at 2-5, 10 (cleaned up).

In their reply, the ERs assert that, “[t]aken together, Quantas’ facially

deficient production, Quantas’ refusal to present a Rule 30(b)(6) witness on

document collection issues, Quantas’ refusal to answer questions about its collection

efforts, and the fact that there are no affidavits in the record swearing to same

demonstrate the alleged ‘technical difficulties’ are a distraction.” Dkt. No. 72 at 5.

The undersigned agrees with the ERs’ assessment.

While Quantas provided a complete answer to Interrogatory Nos. 1 and 2 (the

ERs’ motion focuses on the original and not the supplemental answer to

Interrogatory No. 2), Quantas violated the Court’s order to serve a complete answer

to Interrogatory No. 5.

Interrogatory No. 5 asks Quantas, “[i]f You contend that Matthew Rinaldi was

authorized to execute the Trademark Assignment on behalf of El Paso East, please

identify the person(s) who authorized Mr. Rinaldi to execute the Trademark

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Assignment and the Communication or Document through which such authorization

was provided.” Dkt. No. 66-1 at 22 of 29. Quantas’s supplemental answer states:

“Matt Rinaldi was authorized to sign the Trademark Assignment in his role as

General Counsel to El Paso East.” Dkt. No. 66-1 at 23 of 29. As the ERs explain, this

interrogatory asks “[w]hat human being authorized Quantas’ in-house lawyer to

execute the trademark assignment that is the lynchpin of Quantas’ trademark

claims,” but Quantas’ supplemental answer “does not tell the ERs who authorized

him to execute it, which is what the Interrogatory asked.” Dkt. No. 66 at 7. The

Court agrees that this supplemental answer is evasive. Cf. FED. R. CIV. P. 37(a)(4)

(“For purposes of [Federal Rule of Civil Procedure 37](a), an evasive or incomplete

disclosure, answer, or response must be treated as a failure to disclose, answer, or

respond.”).

More significantly, the ERs report Quantas’ ongoing failure to substantially

supplement its document production, reflecting an apparent and ongoing failure to

conduct any meaningful collection of e-mails, text messages, or other types of

documents in this case. See also Dkt. No. 66-1 at 25-26 of 29 (Declaration of Barton

Wayne Cox).

The Court has previously explained that,

[i]n response to a [Federal Rule of Civil Procedure] 34(a)(1) RFP, “a

party cannot produce what it does not have, and so, [c]learly, the court

cannot compel [a party] to produce non-existent documents.” But, “[i]n

responding to [Rule 34] discovery requests, a reasonable inquiry must

be made, and if no responsive documents or tangible things exist, FED.

R. CIV. P. 26(g)(1), the responding party should so state with sufficient

specificity to allow the Court to determine whether the party made a

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reasonable inquiry and exercised due diligence.” And “[t]he fact that a

party may disbelieve or disagree with a response to a discovery request

... is not a recognized ground for compelling discovery, absent some

indication beyond mere suspicion that the response is incomplete or

incorrect” or the requesting party’s belief, without more, believes that a

discovery production is not complete.

As a general matter, “[i]t is not the court’s role to dictate how a

party should search for relevant information absent a showing that the

party has abdicated its responsibility,” and “[a] responding party is best

situated to preserve, search, and produce its own [electronically stored

information],” which “[p]rinciple ... is grounded in reason, common

sense, procedural rules, and common law, and is premised on each

party fulfilling its discovery obligations without direction from the court

or opposing counsel[, and eschewing ‘discovery on discovery,’] unless a

specific deficiency is shown in a party’s production.”

To make this showing of a specific or material deficiency in the

other party’s production to require the responding party to engage in

additional searches or discovery efforts or to obtain “discovery on

discovery” that is “both relevant and proportional to the needs of the

case” under Rule 26(b)(1), the requesting party should make a showing,

including through “the documents that have been produced,” that

allows the Court to make “a reasonable deduction that other documents

may exist or did exist and have been destroyed” or must “point to the

existence of additional responsive material.”

VeroBlue, 2021 WL 5176839, at *9 (cleaned up).

In the motion and reply (as quoted above), the ERs have persuasively shown,

including through the documents that have been produced or that the ERs know

should exist, that additional responsive materials exist that Quantas has not

produced – or apparently collected for production. As only the most stark example,

as of 14 days after the Court-ordered deadline, Quantas had produced only 7 e-mails

and no text messages or WhatsApp messages (an app that the parties use to

communicate with one another).

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Quantas does not deny that it has not conducted a complete collection and

production of all unproduced documents and electronically stored information that

are responsive to Requests for Production Nos. 1-46 (as modified by the Court) and

that are in Quantas’s possession, custody, or control. Quantas instead offers the

following excuses:

• “Quantas noted in its February 19, 2024, email to Defendants’ counsel

technical difficulties it was having for document production” and

“stated that it was having ‘collection/processing issues on the responsive

documents’ and further informed Defendants that it believed it could

have the issues resolved and the responsive documents produced within

the week”;

• “[a]s one example, (Ex. A, at Appx002) shows an email demonstrating

counsels’ firm’s security protocol was not allowing/blocking the transfer

of files from Quantas”;

• “[a]n additional factor causing delay in Quantas’ document collection

and production has been the decentralized nature of Quantas’ records,”

where “Quantas does not utilize a central document server that neatly

stores all corporate records, emails, and files” but “[r]ather, relevant

records are dispersed across individual employee email accounts and

computers” and “Quantas has had to investigate which specific

employees may possess responsive documents, contact each

individually, obtain account and system credentials to access any

relevant files, and manually search emails, folders, and systems for

relevant documents”;

• Quantas’s “decentralized system has added substantial time to

Quantas’ document collection process as it has had to coordinate with

and gather files from multiple sources rather than easily accessing files

from a single, unified system” but “Quantas has diligently undertaken

these efforts promptly after receiving Defendants’ document requests,

but the nature of Quantas’ record system has undoubtedly caused

increased time to pull together all responsive materials compared to an

organization utilizing centralized servers and file storage,” and

“Quantas continues working to locate any final responsive documents

not yet discovered from individual sources and expects to supplement

its production on a rolling basis as needed”;

• “another significant factor impacting the timing of Quantas’ document

production has been an emergency situation that developed

approximately two weeks” before February 28, 2024, in which “two (2)

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emergency room facilities that Quantas provides management services

for in Houston were summarily shut down without any notice to

Quantas,” which “caused substantial managerial and regulatory issues

for Quantas, including but not limited to dealing with leases and lease

payments, payroll and payroll taxes, bank accounts being frozen, and

personnel issues” and which “emerging crisis required Quantas to

devote substantial efforts to handling the fallout from the abrupt

facility closures”;

• “Quantas leadership and limited staff – the same people tasked with

gathering documents – had to shift their focus to mitigating the issues

caused by the unexpected shutdown of the ERs that Quantas supports,”

and, “[a]s a result, Quantas’ resources for records search and collection

have been severely constrained for the past couple weeks,” but, “[n]ow

that Quantas has made some progress addressing that issue, it has

been able to redirect efforts back to compiling documents and

supplementing its production to Defendants,” although “this emergency

situation further explains why Quantas has needed additional time

beyond the Court’s deadline to pull together documents from multiple

sources”; and

• the ERs’ “continued assertion that the responses were ‘due over six

months ago’ is misstated,” where the ERs “do not address that Quantas’

objections to the original RFPs were substantiated for nearly half of the

RFPs and had to modified by this Court” and, “[s]ince the time that

appropriate RFPs were produced to Quantas, a mere twenty-two (22)

days passed before” the ERs filed their sanctions motion.

Dkt. No. 71 at 5-7 (cleaned up).

These explanations and excuses do not account for the facts that

• the Court’s January 29, 2024 Electronic Order ordered the

supplemental production to be complete by February 19, 2024;

• the attached email reflecting that Quantas’s counsels’ firm’s security

protocol was not allowing/blocking the transfer of files from Quantas is

dated February 20, 2024;

• the Court modified the scope of only RFP Nos. 7, 11-12, 14-23, 25-28,

and 30-32 but ordered Quantas to “serve on the ERs’ counsel complete

responses (without objections) to Requests for Production Nos. 1-46 (as

modified [by the Court]) and produce all unproduced documents and

electronically stored information that are responsive to those requests,”

and Quantas should have engaged in substantial document collection

long before the Court’s order, including to account for the nature and

limitations of Quantas’s system;

-23-

• if Quantas required additional time due to an unexpected crisis, it

should have informed the ERs’ counsel and asked for it and, if an

agreement could not be reached, filed a motion to modify the

court-ordered deadline; and

• as the ERs point out, “Quantas offers no explanation [or evidence] for

why the ‘collection/processing issues’ it purportedly experienced could

not have been sorted out over the last seven months or in the weeks

since February 19,” 2024.

Dkt. No. 72 at 2-6. As the ERs’ counsel’s declaration attests:

• “On January 26, 2024, the ERs noticed the 30(6)(6) deposition of

Plaintiff and Counter-Defendant Quantas Healthcare Management,

LLC,” where “[t]he ERs selected February 28, 2024 for the deposition so

that we would hopefully have time to review Quantas’ anticipated

document production prior to the deposition.”

• “On the February 6, 2024 meet and confer regarding the noticed

deposition topics, counsel for Quantas (Mr. Tuck) indicated that

Quantas did not intend to raise any objections to the notice and that a

witness would be available.” “On the February 6, 2024 meet and confer,

I conveyed to counsel for Quantas that the ERs would press ahead with

depositions in view of the imminent close of discovery, but that the ERs

would take appropriate steps if Quantas failed to produce documents on

February 19, 2024 as ordered by the Court. Counsel for Quantas

confirmed on that call that Quantas was aware of the Court’s January

29, 2024 Order (0kt. 65) on the ERs’ First Motion to Compel, but that it

had not provided any additional documents to its counsel for review and

production.” And “Mr. Tuck did not mention any issues with Quantas’

anticipated production related to ‘technical difficulties’ or an emergency

situation with Quantas’ emergency room facilities in Houston.”

• “On February 19, 2024, counsel for Quantas served supplemental

Interrogatory answers and supplemental responses to Requests for

Admission. Quantas did not serve any updated responses to the

Requests for Production, nor did it produce any additional documents

on or before the February 19, 2024 deadline set by the Court. Quantas

also did not provide a privilege log. True and correct copies of the

supplemental discovery responses served by Quantas on February 19

are included within the Appendix to the instant Motion.”

• “On February 20, 2024, when I again held a telephone conference with

Mr. Tuck, he again made no mention of any ‘technical difficulties’ or

emergency situations that prevented Quantas from timely making its

production on February 19, 2024. Rather, he informed me that Quantas

-24-

had yet to provide documents responsive to him that could, in turn, be

produced to the ERs in discovery.”

• “On February 27, 2024, counsel for Quantas (Mr. Tuck) informed us for

the first time that Quantas would not make a Rule 30(b)(6) witness

available on February 28,” and, “[b]y the time Quantas so informed us,

we had already spent time and money preparing for the deposition.”

• “On February 29, 2024, I wrote to Mr. Tuck asking questions about

Quantas’ document collection efforts,” but “Mr. Tuck’s response did not

answer the questions regarding how many e-mails his law firm had

collected, when any such e-mails were collected, or from whom such

e-mails were collected.”

Dkt. No. 66-1 at 25-26 of 29; Dkt. No. 72-1 at 46-47 of 56.

As the ERs’ counsel explains, the ERs attempted, through a Federal Rule of

Civil Procedure 30(b)(6) corporate representative deposition of Quantas, to learn

more about Quantas’s document preservation, collection, and production issues, but,

“when the date finally came, Quantas failed to make a witness available,” and, so,

the ERs were unable “to test the veracity of the excuses Quantas now offers for its

violations of this Court’s January 29,” 2024 Electronic Order. Dkt. No. 72 at 1.

II. The Court cannot find that Quantas’s violations of the Court’s order were

willful or in bad faith.

The Fifth Circuit has explained that “discovery delays are serious, especially

when they are part of a pattern,” and that “[k]nowingly ignoring an obligation,

especially multiple times, may alone be enough to find bad faith.” Calsep A/S v.

Dabral, 84 F.4th 304, 314 (5th Cir. 2023).

The record evidence here supports a finding that Quantas itself knew about

its obligations to supplement its document production and failed to timely do so –

-25-

and that Quantas itself, rather than its outside counsel, appears to be responsible for

the ongoing violations.

But the Court cannot find these are the “extreme circumstances” under which

Rule 37(b)(2) sanctions can and should be used as a “lethal weapon” through

litigation-ending or “death penalty” sanctions. F.D.I.C. v. Conner, 20 F.3d 1376,

1380, 1383 (5th Cir. 1994).

Quantas has not conducted itself in discovery in this case as any party should.

And, for all the reasons that the ERs persuasively explain in their sanctions motion

and reply, Quantas’s ongoing violations of the Court’s discovery order has

significantly prejudiced the ERs’ ability to prepare for trial. See Dkt. No. 66 at 11-12;

Dkt. No. 72 at 6-8.

But the Court finds, under the circumstances, that more would be required to

find willfulness or bad faith.

III. Serious sanctions are needed and appropriate.

Still, “[l]esser sanctions do not require a finding of willfulness.” Smith, 685

F.3d at 488. And, while “the flagrancy of a party’s behavior must be directly

proportionate to the severity of the sanction imposed,” “the lack of willful,

contumacious, or prolonged misconduct [does not] prohibit[] all sanctions.” Chilcutt,

4 F.3d at 1322 n.23.

Quantas’s conduct, as described above, warrants a serious sanction that is just

and related to the claims that were at issue in the order to provide discovery. Here,

the ERs’ alternative requests are, the Court finds, the appropriate, least severe

-26-

sanction adequate to achieve the proper functions of Rule 37(b)(2) under the

particular circumstances.

The Court orders, under Rule 37(b)(2)(A) and (C), that

1. Quantas must, by April 22, 2024, serve on the ERs’ counsel complete

responses (without objections) to Requests for Production Nos. 1-46 (as

modified by the Court) and produce all unproduced documents and

electronically stored information that are responsive to those requests and

that are in Quantas’s possession, custody, or control, consistent with the

rulings above and in compliance with Federal Rule of Civil Procedure 34(b)’s

requirements;

2. Quantas, in defending against the ERs’ claims, is barred from relying upon

any evidence that it failed to produce by the court-ordered February 19, 2024

deadline;

3. the ERs are permitted to depose Quantas’ witnesses on dates of the ERs’

choosing after the end of the discovery deadline once the ERs have Quantas’

documents in hand but, in any event, by no later than May 22, 2024; and

4. Quantas must reimburse the ERs for their reasonable attorneys’ fees and

costs in drafting and filing their Motion for Sanctions [Dkt. No. 66] and reply

[Dkt. No. 72] and appendices in support.

The discovery deadline has now passed, and the dispositive motions deadline

is upon the parties. The time in which Quantas will be allowed to benefit from its

violations of its discovery obligations is at an end.

These sanctions appropriately address and remediate Quantas’s discovery

misconduct and the resulting prejudice to the ERs. Contrary to Quantas’s

suggestion, ordering only that the ERs may take post-discovery-period depositions is

not a sufficient remedy here.

And, although the Court previously declined to award fees for the ERs’ Motion

to Compel Discovery [Dkt. No. 57] under Federal Rule of Civil Procedure 37(a)(5),

Quantas’s failure to comply with the Court’s January 29, 2024 Electronic Order –

-27-

which was not substantially justified notwithstanding Quantas’s excuses, as

explained above – necessitated this sanctions motion. Quantas now should bear the

expense of the ERs’ attorneys’ fees and costs incurred in bringing it.

The Court directs the ERs’ counsel and Quantas’s counsel to confer by

telephone or videoconference or in person about the reasonable amount of these

attorneys’ fees and costs to be awarded under Rule 37(b)(2)(C), as specified above.

By no later than April 29, 2024, the parties must file a joint report notifying

the Court of the results of the conference. If all disputed issues as to the amount of

attorneys’ fees and costs to be awarded to the ERs’ have been resolved, the ERs’

counsel must also send an agreed proposed order to the Court at

Horan_Orders@txnd.uscourts.gov by April 29, 2024.

If the parties do not reach an agreement as to the amount of attorneys’ fees

and costs to be awarded, the ERs’ counsel must, by no later than May 6, 2024, file

an application for attorneys’ fees and costs that is accompanied by supporting

evidence establishing the amount of the reasonable attorneys’ fees (as described

above) to be awarded under Rules 37(b)(2)(C). The fee application must be supported

by documentation evidencing the “lodestar” calculation, including affidavits and

detailed billing records, and citations to relevant authorities and must set forth the

itemized number of hours expended in connection with the recoverable attorneys’

fees described above as well as the reasonable rate(s) requested. See Tollett v. City of

Kemah, 285 F.3d 357, 367 (5th Cir. 2002).

-28-

If the ERs files an application, Quantas must file a response by Wednesday,

May 28, 2024, and Defendants must file any reply by June 11, 2024.

Conclusion

For the reasons and to the extent explained above, the Court grants in part

and denies in part the ERs’ Emergency Motion for Sanctions [Dkt. No. 66].

SO ORDERED.

DATED: April 8, 2024

Jelbo

DAVIDL.HORAN ————<“—i—S™

UNITED STATES MAGISTRATE JUDGE

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