Opinion
No. 97 C 3742.
March 22, 2001.
MEMORANDUM OPINION AND ORDER
On March 8, 2000, this court entered summary judgment in favor of Defendants on Plaintiff's claims under the Lanham Act. Several months later, the case settled on appeal. Defendants now seek an award of attorneys' fees as a remedy for the conduct of Plaintiff and its attorneys, conduct Defendants call "oppressive and vexatious." As authority for such an award, Defendants invoke 15 U.S.C. § 1117(a), which permits an award of attorneys' fees to a prevailing party in a Lanham Act case, and 28 U.S.C. § 1927, which authorizes such an award against an attorney who "multiplies the proceedings in any case unreasonably and vexatiously." For the reasons set forth below, the motion is denied with respect to 15 U.S.C. § 1117 but granted under 28 U.S.C. § 1927.
DISCUSSION
The underlying dispute between the parties is described in this court's decision granting summary judgment. See PS Promotions, Inc. v. Stern, No. 97 C 3742, 2000 WL 283092 (N.D. Ill. Mar. 8, 2000). To summarize: Defendant Kenneth Stern was the Chief Operating Officer of PS Promotions, an events marketing business, until May 1992, when Stern was terminated by Paul Stanley, the owner and president of PS. Although it was Stanley himself who packed the contents of Stern's desk and office into a box, Plaintiff claims that at the time of his departure, Stern took with him certain materials, including videotapes and documents, that contained trade secrets, and then improperly established a marketing firm in competition with PS Promotions.
Years later, Stanley became suspicious that Stern was passing off PS's work as his own. Stanley arranged for one of PS's own employees, Rick Sullivan, to pose as a potential client and meet with Stern. Stern did meet with Sullivan, gave him a promotional brochure, and showed him a videotape Stern had worked on during his days with PS Promotions. In subsequent contacts with this purported client, Stern provided marketing brochures and other promotional materials in which he described his experience, including references to work he had done for clients of PS Promotions. Plaintiff filed this lawsuit against Stern and his new business, Stern Hall, Inc., alleging that Stern's conduct constituted unlawful competition under a number of theories. The court was unpersuaded, however, by Plaintiff's Lanham Act theories of false designation of origin and false advertising. The court granted summary judgment on those claims and dismissed pendent state law claims without prejudice.
Defendants now seek an award under two theories: They argue, first, that the entire lawsuit was oppressive, justifying an award under § 1117 of the Lanham Act. In addition, they believe they are entitled to an award against Plaintiff's counsel for its conduct in "multipl[ying] the proceedings in [this] case unreasonably and vexatiously." The court addresses these arguments individually below.
I. Award under the Lanham Act: Was this Lawsuit "Exceptional"?
Defendants believe Plaintiff's conduct in this litigation was oppressive and vexatious. In "exceptional cases," courts have discretion to award attorneys' fees to prevailing parties in cases brought under the Lanham Act. 15 U.S.C. § 1117(a). Although § 1117 is ordinarily invoked in cases where prevailing parties have proven infringement, "it may in exceptional circumstances, and when proven by clear and convincing evidence, `provide protection against unfounded suits brought by trademark owners for harassment and the like.'" Finance Inv. Co. (Bermuda) Ltd. v. Geberit AG, 165 F.3d 526, 533 (7th Cir. 1998) (quoting Otis Clapp Son, Inc. v. Filmore Vitamin Co., 754 F.2d 738, 746 (7th Cir. 1985).
In determining whether a case is "exceptional," a prevailing defendant must show that a lawsuit filed against it was "oppressive." Door Systems, Inc. v. Pro-Line Door Systems, Inc., 126 F.3d 1028, 1032 (7th Cir. 1997); see also S Industries, Inc. v. Ecolab, Inc., No. 96 C 4140, 1999 WL 162785 at *7 (N.D. Ill. Mar. 16, 1999) (the test is whether the lawsuit "so lacked merit and was so burdensome to defend against that it could be fairly described as oppressive."). A showing of bad faith is not required; instead, "a suit can be oppressive because of lack of merit and cost of defending even though the plaintiff honestly though mistakenly believes that he has a good case and is not trying merely to extract a settlement based on the suit's nuisance value." Door Systems, Inc., 126 F.3d at 1032. Nevertheless, even if a case may be deemed "exceptional," the decision to award attorney's fees remains equitable in nature, calling upon the court to exercise its sound discretion. See BASF Corp. v. Old World Trading Co., 41 F.3d 1081, 1099 (7th Cir. 1994) ("A decision to award attorneys' fees under the Lanham Act is firmly committed to the district court's discretion"); Dorr-Oliver Inc. v. Fluid Quip, Inc., 966 F. Supp. 718, 720 (N.D. Ill. 1997) (same).
Defendants believe the standard for an award under § 1117 is met here. They urge that Plaintiff and its attorneys knew or should have known that their claims against Stern and his new company were unsupportable. Stanley, Plaintiff's principal, had little solid evidence of any wrongdoing on Stern's part prior to Sullivan's posing as a potential client and meeting with Stern. Even that meeting yielded very little tangible support for Plaintiff's claims.
As more fully detailed in this court's prior order, in response to Stern's motion for summary judgment, Stanley offered no evidence in support of his claim that Stern took confidential materials with him at the time of his termination in 1992. PS Promotions, 2000 WL 283092, at *3. Stanley claims he began hearing "rumors in the industry" of Stern's misconduct soon after Stern's departure but offered only a "vague reference to `a woman' from Kraft whose name he [could] not recall" and his own sketchy memory concerning a Stern Hall marketing brochure that he glanced at while on a sales call. Id. Plaintiff focused on the marketing brochure, case studies, and videotapes that Stern provided Sullivan in the staged client meeting; the court ultimately concluded that there was a dispute of fact concerning Stern's false designation of origin for Stern's own products, but that Plaintiff could not prove a likelihood of confusion arising from the activity. Notably, there was no evidence that Stanley actually lost business to Stern; that Stern intended to mislead clients; or even that Stern ever showed any of the materials in question to any actual or potential client. Id. at * 9, 11.
As Defendants further emphasize, the court itself expressed skepticism about Plaintiff's claims early on. At an October 8, 1998 status hearing, Judge Zagel commented, "Surely you [Plaintiff's attorneys] would not have filed this lawsuit unless you have some indication, in some specific case, that Mr. Stern has done this [alleged misconduct]." (Transcript of 10/8/98, Ex. C to Defendants' Supplemental Appendix, at 7:15-17.) After the case was reassigned, this court commented on the gap between Mr. Stern's departure from PS Promotions and the filing of this lawsuit, suggesting that any serious wrongdoing on Stern's part could be expected to have come to light earlier. (Transcript of 12/18/98, Ex. D to Defendants' Supplemental Appendix, at 21:9-12.) Later, at a status conference, this court observed that the circumstances of the Sullivan contact did not "strike me as on their face a demonstration that Mr. Stern has engaged in unlawful conduct." (Transcript of 4/13/99, Ex. 46 to Defendants' Appendix at 22:11-15.)
On summary judgment, the court concluded that Stern's contacts with Sullivan did not violate the Lanham Act. The court found nothing improper about Stern's presentation to Sullivan of videotapes that he had worked on while employed by PS Promotions. PS Promotions, 2000 WL 283092, at * 7. Nor did Stern's presentation of case studies describing his work at PS constitute a "false designation of origin." Id. Finally, although there was a dispute of fact concerning Stern's listing of PS clients in Stern Hall's brochures, the court found no evidence of a likelihood of confusion from such listing. Id. at *12.
These circumstances are indeed troublesome. It appears to the court that PS Promotions filed this action with little evidentiary support and continued to pursue it even after discovery yielded little additional evidence. The court is, nevertheless, reluctant to award attorneys' fees on this basis. As the Seventh Circuit has observed, this court's rejection of Plaintiff's arguments does not mean that those arguments constituted an "abuse of process." Dorr-Oliver, Inc. v. Fluid-Quip, Inc., 132 F.3d 36 (Table, Text in WESTLAW), No. 97-2706, 1997 WL 800872, at * 2 (7th Cir. 1997). Nor is the fact that Plaintiff pleaded a Lanham Act violation "on information and belief" by itself improper, as Defendants suggest. (Defendants' Memorandum of Law in Support of Motion for Award of Attorneys' Fees (hereinafter, "Defs.' Memo"), at 3 n. 5.) See Mitsubishi Elec. Corp. v. IMF Tech., Inc., 44 U.S.P.Q.2d 1904, No. 96 C 499, 1997 WL 630187, at *11-12 (N.D. Ill. Sept. 30, 1997); cf. Zenith Electronics Corp. v. Exzek, Inc., No. 93 C 5041, 1997 WL 798907, at *13 (N.D. Ill. Dec. 27, 1997).
Even that limited evidence could have and should have been ferreted out much earlier. This case was filed on May 21, 1997, and Defendants filed their answer 21 days later. So far as the court's docket reflects, Plaintiff took no action at all to move the case forward for at least a year, did not serve its first set of interrogatories until May 29, 1998, and, as of October 8, 1998, had not noticed a single deposition. (Docket sheet, Ex. 2 to Defendants' Appendix; Plaintiff's First Set of Interrogatories, Ex. 4 to Defendants' Appendix; Transcript of 10/8/98, Ex. C to Defendants' Supplemental Appendix.) Plaintiff did serve a document request in July 1997, but, although apparently dissatisfied by the response, did not file a motion to compel until September 30 of the following year. (Plaintiff's First Request for Production, Ex. 5 to Defendants' Appendix; Docket sheet, Ex. 2.)
Other cases in which fees have been awarded pursuant to § 1117 involved more egregious circumstances. For example, in S Industries, Inc. v. Centra 2000, Inc., No. 96 C 3524, 1998 WL 395161, at *1, 2 (N.D. Ill. July 9, 1998), plaintiff had alleged that defendants violated § 32 of the Lanham Act by using their registered trademark, although plaintiff had never obtained a federal registration for use of its mark on computer software. Further, when defendants moved for summary judgment, plaintiff failed to file the statement of disputed fact in accordance with this court's local rules. Id. at *2. Other judges of this court have granted § 1117 sanctions against the same plaintiff in other lawsuits, for similar reasons. See S Industries, Inc. v. Ecolab, Inc., No. 96 C 4140, 1999 WL 162785, at *8 (N.D. Ill. Mar. 16, 1999) (plaintiff's claim that its "pest elimination products" were related to the products for which it had a registered mark was "fanciful"); S Industries Inc. v. Diamond Multimedia Systems, Inc., 17 F. Supp.2d 775, 776 (N.D. Ill. 1998) (plaintiff's unfair competition claims "were not grounded on a plausible theory of ownership, let alone one even remotely supported by the law or the scant evidence presented"). Similarly, in Finance Inv. Co. (Bermuda) Ltd. v. Geberit AG, 165 F.3d 526, 530 (7th Cir. 1998), the Seventh Circuit affirmed an award of fees under a number of theories, including § 1117, where the court found plaintiffs had filed a Lanham Act case despite the fact that they did not have a protectable interest in the trademark at issue and knew, based upon defendant's statements and the outcome of a previous lawsuit, that defendants had nothing to do with the alleged improper use of the mark.
In contrast, Plaintiff PS Promotions' pursuit of this lawsuit, while arguably disappointing, does not present the oppressive or exceptional circumstances in which § 1117 fees have been awarded. To the extent that this case may fairly be characterized as oppressive or exceptional, this court exercises its discretion to deny the request for fees for the entire case under this section in light of the determination that a more limited award is appropriate, as addressed below.
II. Award under 28 U.S.C. § 1927
In addition to their argument for an award of attorneys' fees under § 1117, Defendants argue that an award against counsel is warranted under 28 U.S.C. § 1927. That statute permits an award of fees against an attorney "who so multiplies the proceedings in any case unreasonably and vexatiously." The court has discretion to enter such an award when the attorney has acted in an "objectively unreasonable manner" by engaging in a "serious and studied disregard for the orderly process of justice," or where the claim lacks a "plausible legal or factual basis." Pacific Dunlop Holdings, Inc. v. Barosh, 22 F.3d 113, 119 (7th Cir. 1994). Vexatious conduct involves either subjective or objective bad faith. Id. (citing Kotsilieris v. Chalmers, 966 F.2d 1181, 1184 (7th Cir. 1992)). Objective bad faith is met by "extremely negligent conduct, like reckless and indifferent conduct." Id. at 120 (citing Kotsilieris, 966 F.2d at 1185). In sum, an attorney's actions must generally be "so completely without merit as to require the conclusion that they must have been undertaken for some improper purpose." Oliveri v. Thompson, 803 F.2d 1265, 1273 (2d Cir. 1986).
Sanctions under § 1927 may well be appropriate for counsel's conduct in the course of discovery. See generally Castillo v. St. Paul Fire and Marine Ins. Co., 938 F.2d 776, 780-81 (7th Cir. 1991) (affirming sanctions imposed under § 1927 for discovery abuse); Perkins v. General Motors Corp., 129 F.R.D. 655, 663-64, 666 (W.D. Mo.1990), aff'd, 965 F.2d 597, 600-02 (8th Cir.1992) (imposing sanctions under § 1927 and Rule 26(g) where plaintiff's counsel intentionally withheld name of crucial witness and signed discovery responses which were incomplete and inaccurate). The court is aware that discovery is often contentious and that misunderstandings and miscommunication are not unusual. In this case, unfortunately, the court concludes that the conduct of Plaintiff's attorneys exceeded the bounds of enthusiastic advocacy in two significant areas.
A. Failure to Disclose Information Concerning Rick Sullivan
Rick Sullivan was an employee of PS Promotions who met with Defendant Stern, posing as a potential client of Stern Hall's business. In Plaintiff's own view, the information and materials that Stern disclosed to Mr. Sullivan were the central evidence of Stern's misconduct. Yet Plaintiff's counsel did everything within their power to keep Sullivan's identity and relationship to PS Promotions a secret from Defendants. Counsel's explanation for this conduct is wholly unsatisfying, as explained below.
As noted earlier, Kenneth Stern left his position with PS Promotions in 1992. Years later, PS instructed one of its own employees, Rick Sullivan, to meet with Stern in what Defendants refer to as "an undercover entrapment attempt." (Defs.' Memo, at 3.) It is undisputed that Plaintiff's goal in setting up this meeting was to determine what representations Mr. Stern was making concerning his own marketing business and to collect from Stern any materials that would constitute evidence that Stern was improperly holding out work prepared by PS as that of his own firm. As Plaintiff points out, courts recognize that there are circumstances in both civil and criminal litigation in which "undercover" investigations are necessary in order to expose improper conduct. (Memorandum of Law of PS Promotions, Inc. in Opposition to Defendants' Motion for Award of Attorneys' Fees (hereinafter, "PS Memo"), at 8.) The court's concern in this case, however, is not the fact that PS conducted an investigation, but that once the results of the investigation became the basis for this lawsuit, Plaintiff unreasonably refused to disclose information concerning Mr. Sullivan's identity, as described below.
1. Sullivan's Identity
At the time of his meeting with Stern, Sullivan introduced himself as the head of a marketing company called "Sullivan Communications, Inc." Plaintiff points out that Sullivan Communications was in fact incorporated in February 1991 and contends that the company existed at the time of the March 27, 1997 meeting with Stern. The record on this point is equivocal: According to records of the Illinois Secretary of State's Office, Sullivan Communications, Inc. was dissolved "as of" July 1, 1997. (Secretary of State Records, Ex. 3 to Plaintiff's Appendix.) Sullivan himself testified that he operated the company from "February of '91 to September — I don't remember the exact ending date. It was around September of '97 or '96." (Sullivan Deposition, Ex. to Defendants' Supplemental Appendix, at 30:9-11.) There is no dispute, however, that at the time of Sullivan's meeting with Stern, he was employed by PS Promotions, but that he did not reveal that identity to Stern.
After Plaintiff filed this lawsuit, Stern's attorneys came to suspect that PS was involved in the Sullivan-Stern meeting. In June 1998, they served PS with an interrogatory seeking "the name, address and telephone number" of the person who met with Stern the previous spring. (Defendants' First Set of Interrogatories to Plaintiff, Attachment A to Defendants' Motion to Dismiss, Ex. 8 to Defendants' Appendix.) When PS answered this interrogatory on September 1, 1998, it provided only the name Rick Sullivan. Plaintiff's failure to provide the requested information was improper, and Plaintiff's explanation for this failure is unsatisfying: Plaintiff suggests that it had no obligation to furnish Sullivan's address because "Stern had correspondence from Sullivan that revealed Sullivan's home and business address even before the suit began." (PS Memo, at 8.) The documents PS cites for this proposition include only a faxed memo to Stern from Sullivan Communications — a memo that would appear to reveal Sullivan's business address, and Sullivan's testimony at his 1999 deposition that his business address was the same as his home. (Sullivan Memo, Ex. 4 to Plaintiff's Appendix; Sullivan Dep., Ex. 5 to Plaintiff's Appendix, at 5:23-24.) In any event, as Defendants point out, PS was responsible to answer the interrogatory regardless of what information Stern may or may not have had. (Defs.' Memo at 6.)
Still uncertain of Sullivan's relationship to PS, on September 10, 1998, Defendants served PS with a notice for Sullivan's deposition. (Notice of Deposition, Ex. 11 to Defendants' Appendix.) On October 12, 16, and 21, Defendants' counsel sent letters to attorneys for PS, seeking a mutually convenient date for the deposition. Plaintiff's attorneys made no response to any of these letters and have offered no explanation for failing to respond. To explain their refusal to produce Sullivan voluntarily for his deposition, Plaintiff's counsel observe that "since Sullivan was not a principal of PS, PS had no duty to produce him." (PS Memo, at 9.) Yet despite their apparent view that Defendants would have to subpoena Mr. Sullivan, a PS employee, counsel still failed to provide his home address. Ultimately, on November 2, 1998, Defendants issued a subpoena to Sullivan at what they believed to be the address of Sullivan Communications, Inc. (Subpoena, Ex. 15 to Defendants' Appendix) and issued a check to him for $40.00. In letters dated November 3, 4, 5, and 6, Plaintiff's counsel objected to proceeding with that deposition, in part based upon their insistence that Mr. Stern's deposition should take place first. (Letter of 11/3/98 [Ex. K to Defendants' Motion to Dismiss], Ex. 25 to Defendants' Appendix; Letter of 11/4/98, Ex. 17 to Defendants' Appendix; Letter of 11/5/98 [Ex. L to Defendants' Motion to Dismiss], Ex. 25 to Defendants' Appendix; Letter of 11/6/98, Ex. 19 to Defendants' Appendix.)
This refusal was improper. The Federal Rules make plain that there is no "order" to discovery: "[M]ethods of discovery may be used in any sequence, and the fact that a party is conducting discovery, whether by deposition or otherwise, shall not operate to delay any other party's discovery." FED.R.CIV. P. 26(d). Plaintiff insisted that Judge Zagel ordered that the Stern deposition proceed first, but the context defeats that notion: it was Defendants' attorneys who suggested at a conference with Judge Zagel that Plaintiff's claims lacked merit and that discovery would reveal this. At the October 8, 1998 status conference, Judge Zagel pointed out, with respect to his own concerns about the claims against Stern, "It would be helpful to me if you had deposed Stern and we saw what Stern had to say. . . . [I]t seems to me that we are dead in the water until you depose Stern,. . . . You can do Stern in the next three weeks maybe?" (Transcript of 10/8/98, Ex. C to Defendants' Supplemental Appendix.) Judge Zagel's comments, made nearly 18 months after Plaintiff filed this lawsuit, must be understood as an expression of his own concern that discovery be commenced promptly, not as a direction that Plaintiff hold back its own witnesses until Plaintiff's counsel had gotten around to deposing the principal Defendant.
Plaintiff's apparent misconception that its own discovery ought not proceed before Defendants', as well as the early slow pace in this case, are perhaps responsible for another of the disputes in this litigation. On November 10, 1998, almost eighteen months after PS filed this lawsuit, this court entered an order setting a discovery close date of February 15, 1999. (Docket Sheet, Ex. 2 to Defendants' Appendix, No. 20.) On February 11, 1999, the court extended discovery to March 15. (Id. No. 30.) As of March 11, 1999, both parties had served additional discovery requests, and the court ordered that both parties furnish responses as quickly as possible. (Id. No. 33.) A week later, the court ordered Defendants to provide additional documents but otherwise denied Plaintiff's request for a further discovery extension. (Id. No. 35.) Despite the fact that discovery was open to both sides for more than a year and a half, and that the court had set a discovery close date months earlier, Plaintiff's counsel complained on March 26, 1999 that on March 11 the court had given him exactly four days' notice of the discovery deadline. (Transcript of 3/26/99, Ex. 40 to Defendants' Appendix, at 4:8-15.) The court expressed regret concerning Plaintiff's counsel's misunderstanding (Id. at 9:13-22) but now believes, on review of the record, that Plaintiff in fact had ample notice of the discovery schedule.
Although Plaintiff's attorneys initially asserted that they did not represent Sullivan, in a November 4 letter they advised Defendants' counsel that Sullivan was not available for a November 6 deposition. (Letter of 4/4/98, Ex. 17 to Defendants' Appendix.) On November 5, Plaintiff's attorneys reported that they had agreed to undertake his representation "as [he] will not likely to be able to retain other counsel in time to respond to your latest specious facsimile transmission." (Letter of 11/5/98, Ex. L to Defendants' Motion to Dismiss, Ex. 25 to Defendants' Appendix.) Finally on November 9, Plaintiff's attorneys announced "[W]e now represent Rick Sullivan. Any contact with him must come through us." (Letter of 11/9/98, Ex. 20 to Defendants' Appendix.) In Plaintiff's attorneys' view, their new status as Sullivan's attorneys permitted them to refuse to provide information concerning his name and address. Id. ("[W]e are not required to answer interrogatory no. 15 to an extent greater than we already have.") In this court's view, to the contrary, Plaintiff's attorneys were required to provide this information, and their failure to do so needlessly protracted these proceedings. Defendants ultimately learned that Sullivan was a PS employee at the deposition of a PS senior vice president on December 1, 1998. In its response to this motion, Plaintiff's attorneys offer no explanation for their failure at any time to disclose Sullivan's status.
2. The Sullivan Memo
Counsel's conduct with respect to the Sullivan memo was equally troublesome. As noted, Plaintiff contended that information Stern provided to Sullivan was central to its Lanham Act claims. After his initial meeting with Kenneth Stern, on March 26, 1997, Rick Sullivan prepared an e-mail memorandum describing that meeting. Among the details set forth in that memo were Sullivan's observations that
the only time he [Stern] stated PS Productions [sic] was when he said that he was recruited by PS to come to Chicago and run its programs. . . . On the same note, he never directly said that these programs were the work of Stern Hall (he also never said directly that they were the work of PS). Essentially, he used the examples above to present Stern Hall to me.
Nothing in print or on video specific said PS Productions [sic], either. (Sullivan Memo, Ex. 3 to Defendants' Appendix.)
In their first set of interrogatories, Defendants specifically requested the identity of any statement from potential witnesses. When Plaintiff answered these interrogatories on September 1, 1998, Plaintiff identified no statements at all in response to this interrogatory, instead stating a blanket objection of attorney-client privilege and work product immunity. (Plaintiff's Objections and Answer to Defendants' First Set of Interrogatories, Ex. 10.) Defendants promptly wrote a letter pursuant to the local rule requiring parties to "meet and confer" concerning discovery disputes. Not until Defendants had filed a motion to compel did Plaintiff's attorneys respond to that letter with the puzzling assertion that it had no obligation to identify the Sullivan memo because "you never requested a privilege log." (Letter of 11/9/98, Ex. 20 to Defendants' Appendix.) Again, Plaintiff's declaration reflects a gross misunderstanding of the discovery rules. The party who withholds information or documents is required by those rules to produce a privilege log. FED. R. CIV. P. 26(b)(5); see Allendale Mut. Ins. Co. v. Bull Data Sys., Inc. 145 F.R.D. 84, 88 (N.D. Ill. 1992). No "request" for such a log is required. Plaintiff's refusal to prepare a privilege log without a formal request again needlessly protracted this litigation.
Defendants in fact did request a privilege log (Letter of 11/16/98, Ex. Q to Defendants' Motion to Dismiss, Ex. 25 to Defendants' Appendix), and, in a second letter, again requested a response to its interrogatory seeking the identity of witness statements. (Letter of 11/16/98, Ex. N to Defendants' Motion to Dismiss, Ex. 25 to Defendants' Appendix.) This second letter asserted that Plaintiff's blanket objection had no merit, and noted that Plaintiff's attorney had asked Defendant for identical information, which Defendants had provided. (Id.) When Plaintiff had not responded by November 19, Defendants wrote yet again and filed a motion to dismiss the case as a discovery sanction. (Defendants' Motion to Dismiss, Ex. 25 to Defendants' Appendix.) Finally on November 24, the day Defendants' motion to dismiss was heard by this court, Plaintiff disclosed the existence of the Rick Sullivan memo, but stood by its refusal to produce it. (Letter of 11/24/98, Ex. E to Defendants' Supplemental Appendix.)
This court considered the matter at a November 30, 1998 discovery conference. The court had little difficulty overruling the attorney-client privilege objection that Plaintiff had voiced in its initial response; there was no basis on which the memo could be understood as a communication with counsel. (Order of 11/3/98, Ex. 28 to Defendants' Appendix.) The court directed that Plaintiff produce the memo for counsel's review only at the deposition of Paul Stanley on December 1, 1998; to ensure that Mr. Stern's independent recollection of his communications with Sullivan were not improperly influenced, the court directed that the memo not be disclosed to him prior to his own deposition on December 2, 1998. (Id.) The court itself expected that the memo would be produced to Defendants after Mr. Stern's deposition (Transcript of 4/8/99, Ex. 43 to Defendants' Appendix, at 5:20-22), but Plaintiff interpreted this direction as a shield against use of the memo at the depositions of other witnesses, including that of Sullivan himself.
Indeed, on April 8, 1999, the court granted another of Defendants' motions to compel, this time ordering that the document be produced in its entirety, with the exception of any language reflecting litigation strategy. (Order of 4/8/99, Ex. 44 to Defendants' Appendix.) Plaintiff interpreted this direction as an invitation to redact portions of the Sullivan memo in which Sullivan noted that Stern had not mentioned PS in their meeting and had not claimed the work he was displaying to Sullivan as that of Stern Hall or of PS itself. Ultimately, on April 13, 1999, this court granted Defendants' request for an in camera review of the Sullivan memo and ordered that it be produced in its entirety, save two words in the "re:" line. (Order of 4/13/99, Ex. 48 to Defendants' Appendix.) Nothing else about this memo can be interpreted as reflecting attorney impressions or trial strategy. Plaintiff's refusal to produce directly relevant (albeit damaging) evidence in response to a legitimate discovery request unduly protracted these proceedings.
B. Discovery Delays and Objections
Finally, Defendants ask the court to consider Plaintiff's delays and failures to cooperate with discovery. On July 29, 1998, Defendants' attorneys sent a lengthy letter concerning outstanding discovery matters. (Letter of 7/29/98, Ex. 8 to Defendants' Supplemental Appendix.) While Plaintiff's lawyers wrote back on August 12, that letter referred to possible settlement efforts and made no formal response to Defendants' discovery concerns, instead listing Plaintiff's own concerns about Defendants' discovery responses. (Letter of 8/12/98, Ex. 8 to Plaintiff's Appendix.) Defendants filed their first motion to compel on August 21 (Motion to Compel, Ex. 8 to Defendants' Appendix), but withdrew that motion based on Plaintiff's assurances that the responses were forthcoming. (Letter of 8/25/98, Ex. 9 to Defendants' Appendix.) Further motions were filed on November 6 and November 24, 1998, and were granted by agreement when Plaintiff agreed at last to produce witnesses for their depositions. (Order of 11/24/98, Ex. 27 to Defendants' Appendix.) On April 8, 1999, the court granted a motion directing Plaintiff to produce the Sullivan memo, Mr. Stern's personnel file, Plaintiff's marketing brochures, and documents relating to certain videotapes. (Order of 4/8/99, Ex. 44 to Defendants' Appendix.) At the April 8, 1999 hearing, the court heard but overruled Plaintiff's vehement objection to production of certain marketing brochures. Plaintiff's counsel stated at that hearing that Plaintiff has "numerous marketing brochures" (Transcript of 4/8/99, Ex. 43 to Defendants' Appendix, at 13:2-3) and that production of such brochures would be extremely burdensome: "Do you know how many marketing brochures our client sends out, your honor?" (Id. at 14:15-16.) Finally, counsel requested that the production be for attorneys' eyes only, cautioning, "we don't want to give Mr. Stern a voluminous amount of marketing brochures. . . ." (Id. at 28:6-7.)
Despite a lengthy discussion of these matters and an explicit written order, Plaintiff did not produce the requested materials. Defendants presented yet another motion to compel on May 5, 1999, this one accompanied by an affidavit from one of Defendants' attorneys describing his failed efforts to communicate with Plaintiff's counsel about the discovery matters. The parties dispute generally whether Plaintiff's attorneys responded appropriately to Defendants' letters and calls throughout the course of this litigation. At least with respect to the events leading up to the May 5, 1999 motion, the court concludes that Plaintiff's attorneys' response was ineffective and inadequate. For example, Plaintiff's attorneys provide no explanation for their conduct on April 22, 1999, recounted in Defendants' attorney's letter of that date as follows:
This morning you told me that there were some documents available today and that I should call Jeff Kopiwoda to make arrangements.
Thus, I called Mr. Kopiwoda earlier this afternoon and was told he was on the phone. I stayed on hold for about ten minutes and was then told that Mr.
Kopiwoda would be on the phone for a very long time. I then asked for you, Glenn Udell, and Bill Bass, in that order, and was told that, for various reasons, no one was available. I then asked for Peter Weiss and explained that I was calling to make arrangements to pick up the documents. He said he would call me back in a few minutes. However, I never heard back from him. Nor have I received any documents from your firm.
(Letter of 4/22/99, Ex. 51 to Defendants' Appendix.)
The court addressed the matter of communication between counsel specifically at a May 5, 1999 hearing, commenting on counsel's very recent disclosure that certain requested documents (marketing brochures and videotapes) did not in fact exist:
THE COURT: [T]he reason I am so baffled by that is that then if that's the case, then why not when you get an April 26th letter from Mr. Hale [Defense counsel] that says, "It appears that you have not produced your marketing brochures. . . . It appears that you did not produce any documents that refer or relate to the distribution of the videotapes." Why not at that point say, "I better give Mr. Hale a call and tell him there aren't any?"
MR. UDELL: Judge, all I can tell you is that I can't speak for [Co-counsel] Mr. Pomerantz. . . . I can't answer for why he did or didn't do what you are asking me to answer.
(Transcript of 5/5/99, Ex. 56 to Defendants' Appendix, at 16:8-24.) Equally baffling and disturbing to the court was the fact that Plaintiff's attorneys had engaged their opponent and this court in a lengthy objection to the alleged burden of producing marketing brochures — documents that upon further investigation turned out to be non-existent. This court concludes, as it did in May 1999, that Plaintiff's conduct with respect to Defendants' discovery requests unduly protracted these proceedings. At that time, the court characterized Plaintiff's practice of asserting objection to production of documents that do not exist as "a puzzling waste of attorney time." (Transcript of 5/10/99, Ex. J to Defendants' Appendix, at 19:7-11.) Plaintiff's attorneys' refusal to respond promptly to discovery, failure to investigate concerning the availability of requested materials, and silence in response to Defendants' repeated contacts, unreasonably multiplied the proceedings in this case.
CONCLUSION
The court takes no pleasure in sanctioning attorneys. Nor should the parties interpret this court's criticisms of the performance of Plaintiff's counsel as a pronouncement that the conduct of Defendants and their attorneys were in all respects blameless. The court's careful review of the history of this litigation, however, leads to the conclusion that to take no action here would be an abuse of discretion. Plaintiff's attorneys acted improperly in failing promptly to disclose Mr. Sullivan's identity and relationship to PS Promotions. They acted improperly in objecting to and withholding for months the e-mail memo prepared by Mr. Sullivan after his meeting with Mr. Stern. Finally, the pattern of Plaintiff's counsel in refusing to cooperate and communicate in discovery with their opponents in discovery generated needless delay and expense for opposing counsel. To require that Defendants bear the expense generated by Plaintiff's performance would be to reward incivility.
The court, therefore, grants Defendants' motion for an award pursuant to 28 U.S.C. § 1927 and invites Defendants to prepare and submit a motion for an award of the attorneys' fees they expended in (a) seeking Rick Sullivan's identity and address and procuring his attendance at a deposition; (b) obtaining production of the Rick Sullivan memo; and (c) pursuing responses and compliance with all of the discovery ordered by this court on April 8, 1999, including the expense of preparing and presenting their May 5, 1999 motion to compel. Before submitting such a motion, the court expects compliance with this court's Local Rule 54.3. The court would welcome efforts on the part of counsel to settle their differences on this matter.