International Petroleum Products and Additives Company v. Black Gold S.A.R.L.

Background

The court had previously confirmed IPAC’s arbitration award against Black Gold and entered a judgment for $1,094,193.58. After Black Gold did not pay the judgment, IPAC sought discovery about Black Gold’s assets and ability to satisfy the judgment. IPAC served 11 interrogatories, 30 requests for production, and 32 requests for admission.

Black Gold asserted objections instead of providing substantive responses. Its objections included arguments that Federal Rule of Civil Procedure 69 did not apply to foreign parties, that certain terms were vague, that the requests were overbroad or irrelevant, and that some interrogatories exceeded the presumptive limit of 25 written interrogatories. The parties attempted to resolve the dispute through written communications and meet-and-confer efforts, but Black Gold did not withdraw its objections or provide the requested substantive responses.

On June 9, 2020, the court overruled Black Gold’s objections as meritless and ordered it to provide substantive responses and produce responsive documents. That order authorized IPAC to seek sanctions under Rule 37. IPAC then requested $17,000 in attorneys’ fees and costs incurred in obtaining that discovery ruling, and asked that Black Gold and its counsel be held jointly and severally liable.

Parties’ Positions

IPAC argued that Black Gold had no legitimate justification for its discovery conduct and that its counsel should share responsibility because the objections were meritless. Black Gold argued that its objections were substantially justified by the burden of the requests, its business interests involving customers on multiple continents, and COVID-19-related delays. It also argued that its attorneys should not be held jointly and severally liable and that IPAC’s requested fees should be reduced.

Court’s Analysis

Rule 37(a)(5)(A) generally requires an award of expenses when a motion to compel discovery is granted, unless the moving party did not first make a good-faith effort to obtain the discovery, the opposing party’s nondisclosure or objection was substantially justified, or other circumstances would make an award unjust.

The court found that IPAC had made a good-faith effort to obtain discovery without court action. IPAC had tailored its requests to identifying assets, granted extensions, and engaged in meet-and-confer efforts. The court also found that Black Gold had not shown substantial justification or other circumstances making sanctions unjust. The COVID-19 pandemic could explain delays in responding, the court stated, but did not explain the meritless objections.

The court rejected Black Gold’s objections concerning the reach of Rule 69, vagueness, relevance, overbreadth, the proposed time limits, and the counting of interrogatory subparts. It also rejected Black Gold’s argument that IPAC was seeking sanctions for failure to pay the judgment rather than for discovery conduct.

The court determined that both Black Gold and its attorneys should be responsible for the sanctions. It stated that counsel had an obligation to advise the client against repeatedly asserting meritless arguments that delayed discovery.

Ruling and Amount

Judge Robert M. Illman agreed, however, that IPAC’s requested amount should be reduced. Although IPAC claimed 40 hours, the court found that 30 hours for the discovery dispute and sanctions motion were reasonable. It also found 4.6 hours spent on the reply reasonable, using a billing rate of $425 per hour. The resulting award was $14,705.

The court granted in part and denied in part IPAC’s request for fees and costs. It ordered Black Gold and its counsel, jointly and severally, to pay IPAC $14,705 within three weeks of the order.