Great Gulf Corporation v. Graham

Background

The dispute involved defendants’ attempts to depose Troy Wilson, Great Gulf Corporation’s authorized agent and designated representative under Rule 30(b)(6), and Laila Alizadeh, Great Gulf’s owner. Both lived in Canada. Magistrate Judge Tony Leung initially allowed the depositions to occur remotely but imposed safeguards because he shared defendants’ concerns about the trustworthiness of Wilson and Alizadeh.

Wilson and Alizadeh did not appear as noticed for depositions scheduled on March 29 and 30, 2022. Great Gulf’s counsel reported the night before that both were experiencing COVID symptoms. Judge Leung found the circumstances and explanations doubtful, ordered Great Gulf to pay defendants’ expenses for arranging the missed depositions, and gave the witnesses another opportunity to appear in person in Canada. He warned that failure to comply would result in the witnesses being prohibited from offering testimony or affidavits in the case.

The depositions were rescheduled for June 1 and 2 in Toronto. Wilson did not appear at the noticed Toronto location on June 1; he attempted to participate from a law office in Elliot Lake, Ontario, but defendants declined to proceed. Alizadeh appeared in Toronto on June 2. Great Gulf then sought a protective order requiring Wilson’s and Great Gulf’s depositions to occur in Minneapolis. Defendants filed a second motion for sanctions based on the June 1 failures.

Magistrate Judge’s Order and Objection

On July 13, 2022, Judge Leung denied Great Gulf’s motion for a protective order and granted defendants’ second motion for sanctions. He prohibited Great Gulf and Wilson from offering evidence through testimony or affidavits, relying on his earlier warning. Great Gulf objected only to that evidence-exclusion sanction. It did not object to the denial of its protective-order motion or to the award of costs and fees to defendants.

Great Gulf argued that Judge Leung should not have placed responsibility for the dispute solely on Great Gulf and should not have disregarded what Great Gulf described as defendants’ unreasonable arrangements for the depositions. Great Gulf acknowledged that its conduct was not wholly reasonable but did not address the conflicting explanations Wilson had given for his failure to appear as noticed.

Court’s Analysis

The court reviewed the nondispositive discovery order under the deferential standard in Federal Rule of Civil Procedure 72(a). Under that standard, the order could be reversed only if it was clearly erroneous or contrary to law. Rule 37 permits sanctions when a party fails to obey a discovery order or fails, after proper notice, to appear for a deposition.

Chief Judge Patrick J. Schiltz concluded that Judge Leung’s decision was neither clearly erroneous nor contrary to law. The court emphasized that Great Gulf had not objected to the safeguards before the depositions were scheduled or before Judge Leung’s May 27 order. The court also relied on Judge Leung’s findings that Wilson had given conflicting explanations and that Great Gulf and Wilson’s second failure to appear as required was not substantially justified.

The court noted that Judge Leung had first imposed monetary sanctions and then gave Great Gulf another opportunity to comply before imposing the evidence-exclusion sanction. Because Judge Leung had warned Great Gulf about the consequence of another failure to appear, the court found the sanction reasonable. The court added that it would affirm even under the more searching review used for dispositive motions.

Disposition

The court overruled Great Gulf’s objection and affirmed Judge Leung’s July 13, 2022 order.