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Dragon Jade International, Ltd. v. Ultroid, LLC

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

November 12, 2019

DRAGON JADE INTERNATIONAL, LTD., Plaintiff/Counter-Defendant,
v.
ULTROID, LLC, ULTROID MARKETING DEVELOPMENT CORP., and ULTROID TECHNOLOGIES, INC., Defendants/Counter-Plaintiffs.

          ORDER

          HONORABLE CHRISTOPHER P. TUTTE UNITED STATES MAGISTRATE JUDGE.

         This cause is before the Court on Plaintiff Dragon Jade's Motion for Sanctions Pursuant to Fed.R.Civ.P. 37 (Doc. 148) and the response in opposition filed by Defendants Ultroid, LLC, Ultroid Marketing Development Corp., and Ultroid Technologies, Inc. (collectively, Ultroid) (Doc. 154). For the reasons discussed below, Dragon Jade's motion is granted in part and denied in part.

         I.

         Dragon Jade initiated this action in October 2017, asserting that Ultroid breached two agreements between the parties. (Doc. 1). As described in Dragon Jade's complaint, one of these agreements (the Option Agreement) granted Dragon Jade the option to purchase particular assets of Ultroid provided Dragon Jade satisfied certain conditions (Doc. 1-1), while the other agreement (the Security Agreement) set forth the terms of security and collateral for the Option Agreement. (Doc. 1-2). Michael Knox, an executive at one or more of the Ultroid entities at the time, executed both agreements on the companies' behalf. (Docs. 1-1, 1-2).

         Ultroid answered Dragon Jade's complaint in February 2018 and asserted various affirmative defenses and counterclaims, the latter of which it amended a year later. (Docs. 40, 126). Of relevance here, Ultroid's amended counterclaims were predicated on, among other allegations, that Knox lacked the legal authority to bind Ultroid to the Option and Security Agreements, and that the Agreements were entered into under fraudulent and coercive circumstances. (Doc. 126). In support of these allegations, Ultroid asserted, inter alia, that Dragon Jade's representatives bribed and extorted Knox into signing the Agreements, including by paying him more than $15, 000 and threatening to release embarrassing photographs of him in compromising positions taken during his visits to Hong Kong. Id. at 6, 11-14.

         During the course of discovery, Dragon Jade propounded numerous requests on Ultroid, including document requests served in April 2018. (Doc. 160-1). By way of those document requests, Dragon Jade sought the disclosure of, among other items, all materials evidencing and/or supporting Ultroid's allegation that “Dragon Jade threatened to release embarrassing and inappropriate photographs that its representatives had taken of Mr. Knox during his visits to Hong Kong . . .” (Request No. 49); and all documents evidencing and/or supporting Ultroid's statement that “Dragon Jade used threat(s), intimidation, manipulation, coercion, blackmailed, and/or fraud to get Mr. Knox to execute the Agreements on behalf of Ultroid” (Request No. 54).

         Ultroid responded to Dragon Jade's production requests in May 2018 (Doc. 160-2) and, contemporaneously with that production, provided a privilege log identifying only one item-an April 23, 2018, valuation of Ultroid (Doc. 148-1).

         Roughly six months later, in late November 2018, Dragon Jade commenced Knox's deposition. (Docs. 159-2, 159-3). Knox was represented by counsel at that deposition and was questioned for approximately four hours by Dragon Jade's attorney. Id. At the beginning of the deposition, Dragon Jade asked Knox, “before today, have you spoken to anyone other than your attorney about any of the facts or issues in this lawsuit?” (Doc. 159-2 at 9). Knox answered, somewhat non-responsively, that he had not “spoken to anybody about [his] testimony.” Id. During the remainder of the deposition, Knox asserted his Fifth Amendment rights multiple times on advice of counsel and refused to answer certain questions related to his involvement with the Dragon Jade/Ultroid interactions and Agreements. Id. Due to scheduling issues, Knox's deposition was suspended with the understanding that it would continue at a future date. (Doc. 159-3 at 34-35).

         Approximately two weeks later, on December 2, 2018, Ultroid served Dragon Jade with an amended privilege log, disclosing for the first time the existence of a “Transcript of sworn statement of Michael Knox” (the Sworn Statement), which had been taken on January 30, 2018, and which Ultroid claimed to be protected under both the work product doctrine and the attorney-client privilege. (Doc. 148-2). The amended privilege log stated that Knox gave this statement while still employed by Ultroid and that it described “the circumstances of negotiation and execution of the Option and Security Agreements and the relationship between Dragon Jade and the Ultroid Companies.” Id.

         The discovery period closed on December 6, 2018, four days after Ultroid's service of its amended privilege log. (Doc. 74). The Court, however, allowed certain limited discovery after this deadline, including the continuation of Knox's deposition. (Doc. 106).

         That deposition resumed on January 15, 2019. (Doc. 159-4). During that proceeding, Knox-who was again represented by counsel-asserted his Fifth Amendment rights and refused to answer any substantive questions. Id.

         In mid-June 2019, both Dragon Jade and Ultroid moved for partial summary judgment. (Docs. 133, 134). Ultroid responded to Dragon Jade's motion two weeks later and included with its response excerpts from Knox's Sworn Statement (Doc. 138-3), which Ultroid claims demonstrate disputed issues of fact (Doc. 138 at 3-8). At Dragon Jade's request, Ultroid emailed Dragon Jade's counsel a complete copy of the Sworn Statement on July 9, 2019. (Doc. 148-4).

         Dragon Jade now requests that the Court sanction Ultroid pursuant to Federal Rule of Civil Procedure 37(c)(1) by precluding it from using Knox's Sworn Statement. (Doc. 148). In support of this request, Dragon Jade argues that Ultroid failed to timely disclose the Sworn Statement's existence during discovery and instead improperly withheld it as attorney-client and work-product protected only to subsequently “ambush” Dragon Jade in an effort to defeat Dragon Jade's partial summary judgment motion. Id. In addition, Dragon Jade asks that Ultroid be ordered to produce all withheld documents pertaining to the Sworn Statement and to pay Dragon Jade's reasonable expenses caused by Ultroid's belated disclosure. Id.

         In response, Ultroid argues that, “out of an abundance of caution, ” it timely and adequately disclosed the existence of the Sworn Statement in its amended privilege log, but later decided to waive the attorney-client and work-product protections[1] so that it could use the ...


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