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Schwarz v. Villages Charter School, Inc.

United States District Court, M.D. Florida, Ocala Division

January 10, 2017

LOUIS SCHWARZ et al., Plaintiffs,


          HON. GEORGE CARAM STEEH, Judge [*]

         Now before the court is plaintiffs' motion for sanctions. Plaintiffs seek default judgment, or in the alternative, seek to preclude defendant the Villages Charter School, Inc., from making its undue burden defense, based on defendant's alleged failure to cooperate in discovery and in preparing the joint final pretrial statement, for allegedly making false statements to the press in order to influence this litigation, and for closing the Lifelong Learning College. Defendant has responded in writing. Having carefully considered the written submissions, plaintiffs' motion for sanctions shall be denied.

         A. Factual Background

         The facts of this case were fully set forth by prior order of the court in Judge Howard's summary judgment decision dated February 29, 2016. (Doc. 189). Recent developments including the closing of the Lifelong Learning College, and the publication of articles in the local press about it, were thoroughly discussed in the court's prior order denying plaintiffs' motion for a temporary restraining order and permanent injunction. (Doc. 285). The court does not reiterate those facts here. The court limits its discussion here to the facts surrounding plaintiffs' claim that defendant failed to cooperate in discovery, and failed to cooperate in preparing the joint final pretrial statement.

         As to plaintiffs' claim that defendant did not adequately participate in preparing the joint final pretrial statement, the court has considered the affidavit of defense counsel Mary Nardella, stating that she sent multiple e-mails to plaintiffs' counsel regarding the joint final pretrial statement, beginning over a week before the document was due, and drafted a joint motion to extend the deadline for its filing. (Doc. 286). She also attested to the fact that she continued to communicate with plaintiffs' counsel working late into the evening the night before the statement was due, staying until 10:00 p.m. before finally leaving to put her baby to bed. Id. According to Nardella's affidavit, defense counsel spent more than 70 hours working on the first joint final pretrial statement, and more than 40 hours working on the second joint pretrial stipulation. Id.

         As to plaintiffs' claim that defendant did not cooperate in discovery, the court finds plaintiffs' claim that defendant listed certain documents as exhibits on the pretrial statement without previously disclosing those documents to be the most significant allegation of wrongdoing. Those documents were certain profit and loss statements for the years 2010, 2011, 2012, and 2014, and checks from defendant to the Holding Company. Plaintiffs objected to the use of those documents in the joint final pretrial order and Judge Howard discussed the objections on the record during the joint final pretrial conference held on October 5, 2016. (Doc. 267). At that time, plaintiffs requested that the materials be precluded or that they be allowed to take a deposition concerning the omitted documents. (Doc. 267 PageID 7445-46). Defendant agreed to produce a corporate representative for the deposition and plaintiffs agreed that was satisfactory. Id. at PageID 7446. Judge Howard reopened discovery for the limited purpose of taking the deposition of the corporate representative regarding those exhibits that were identified on defendant's exhibit list, but were not produced during discovery, and ordered that the deposition be taken before November 30, 2016. (Doc. 263).

         Over a month later, on November 11, 2016, plaintiffs served their notice of deposition of defendant's corporate representative pursuant to Federal Rule of Civil Procedure 30(b)(6). The notice identified twenty-four areas of inquiry, including, among other things, information about defendant's bank accounts, how money was transferred between the Holding Company and the Lifelong Learning College, and sought production of checks received by defendant from the Holding Company or paid to the Holding Company by the defendant. (Doc. 283-7). Defendant objected to the alleged overbreadth of the notice via a letter to plaintiffs' counsel stating that only two areas of inquiry were allowed based on Judge Howard's order: (1) all profit and loss statements listed on defendant's exhibit list, and (2) Dragon Naturally Speaking software, literature, and equipment, listed on defendant's exhibit list. (Doc. 283-8).

         In its letter, defendant complained that the majority of the documents sought related to advances and payments between the Holding Company and defendant which it asserted were previously produced during the deposition of John Wise, vice-president and CFO of the Holding Company, on November 11, 2014. Id. Because discovery did not end until February 1, 2015, defendant pointed out that plaintiffs had more than two months to inquire about those documents. Id. In their motion for sanctions, plaintiffs admit that the checks written from defendant to the Holding Company were produced by Wise, but claim that their production was not responsive to his subpoena, and that the checks were “hidden amongst approximately 140 pages of otherwise responsive documents.” (Doc. 282 PageID 8205 n.17).

         Plaintiffs did not file a motion to compel based on defendant's objection to the scope of the questions they sought to pose to defendant's corporate representative, but went forward with the deposition of Gina Ritch, defendant's director of accounting, on November 30, 2016. Her deposition lasted five hours. This was the second time that plaintiffs deposed Ritch. Plaintiffs deposed Ritch about the profit and loss statements, and about the checks issued from the defendant to the Holding Company. (Doc. 277-11).

         As a result of Ritch's second deposition, plaintiffs claim they learned of additional relevant documents for the first time: (1) a letter requesting the advance dated August 17, 2010, (2) original budgets and quarterly budgets for each of defendant's seven departments, (3) profit and loss statements for each of the departments, (4) Ritch's accounting ledger, (5) proof of rent payments, and (6) documentation concerning patron memberships such as the number, cost and how many courses the patron members participate in each year.

         Plaintiffs claim that those documents should have been produced in response to item 18 of their requests to produce which stated, “Please produce all your financial documents including but not limited to your tax returns, revenue statements, receipts of amenities fees, expense reports, balance sheets, financial statements, budgets, profit- loss statements, income statements, audit statements and other financial documents.” (Doc. 282, Ex. A at PageID 8222).

         Plaintiffs also allege that defendant's responses to their requests to produce sent in August, 2013, were incomplete, and state that in February and March, 2014, plaintiffs sent defendant two letters stating their responses to plaintiffs' requests to produce were deficient. Plaintiffs never filed a motion to compel. Plaintiffs assert that one week prior to the depositions of defendant's witnesses, defendant served them with 10, 000 pages of documents. Plaintiffs suggest that they were unable to process the document production prior to the depositions, but it is undisputed that plaintiffs never sought to adjourn the noticed depositions, either informally or by way of a formal motion. In the motion now before the court, plaintiffs contend that defendant should have been required to organize the 10, 000 pages of financial documents produced, but again, plaintiffs cannot show that they ever asked defendant to do so, either informally or by way of a formal motion.

         Plaintiffs also complain that in July, 2014, defendant made 88 redactions to documents produced primarily on the basis of the work product privilege, but claim that defendant failed to provide sufficient explanation of the basis for the privilege. Specifically, plaintiffs complain that defendant asserted the privilege with respect to emails between Michelle Shideler and Randy McDaniel regarding plaintiffs' requests for accommodation, but that neither Shideler nor McDaniel are attorneys. Plaintiff never filed a motion objecting to the assertion of the privilege.

         Plaintiffs also complain that defendant misled them about whether it received federal funding for the first year after this lawsuit was filed, causing the delay in their ability to amend the Complaint to add a claim under § 504 of the Rehabilitation Act. Plaintiffs assert it was and remains improper for defendant to argue that the Lifelong Learning College is a separate entity from the K through 12 charter school, and does not receive federal funds.

         Finally, plaintiffs argue that the court should use its inherent powers to grant them a default judgment because of certain statements reported in several local newspapers about this lawsuit, some of which are attributable to the defendant, and ...

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