Richards v. Kallish

Background

The opinion resolves cross-motions under Rule 37 of the Federal Rules of Civil Procedure, which allows courts to impose consequences for certain discovery violations. Defendants asked the court to sanction Plaintiff’s counsel, Claudia Pollak, for violating a confidentiality and protective order by sending Nicole Richards document productions that included materials designated “Attorneys’ Eyes Only” (AEO). Defendants requested additional declarations, an addendum governing Pollak’s handling of AEO materials, attorney’s fees and investigation costs, and monitoring costs.

Pollak acknowledged that she twice forwarded productions to Richards and that the productions contained AEO documents. Richards downloaded both productions. Pollak stated that she acted inadvertently, instructed Richards not to view the AEO materials, and directed her to delete the productions. Richards submitted declarations stating that she did not view the AEO materials, did not disclose confidential information, did not use it for any purpose other than the litigation, and deleted the productions.

Richards separately asked the court to sanction Defendants for allegedly withholding damages-related documents and attorney invoices despite directions from the court. Defendants disputed that the court had issued orders requiring production at the times Richards identified. They argued that they had concerns about the relevance of damages-related documents while a motion to dismiss was pending and about redactions and attorney-client privilege involving the invoices.

Defendants’ Motion

The court held that Pollak violated the confidentiality and protective order by transmitting AEO documents to Richards. The court explained that AEO treatment is intended to prevent a party from viewing sensitive information while allowing the party’s lawyers to use it in litigating the case. The court found Pollak’s conduct, at best, negligent and, at worst, reckless, because Defendants had warned her several times that the production would include AEO materials, and the production itself contained warnings.

The court nevertheless found that Pollak lacked malicious intent. It credited the prompt remedial steps described in the submissions, including Richards’s deletion of the productions and her declaration that she never viewed the AEO materials. The court rejected Pollak’s arguments that Defendants’ designations were too broad, that Defendants should have separated the AEO documents, and that Defendants should have known Richards was downloading the productions. Those matters did not excuse sending AEO materials to a client.

The court denied Defendants’ requested sanctions. The requests for new declarations and an addendum were moot because Richards had already submitted a declaration and the parties had already submitted a stipulated addendum governing AEO documents, which the court entered. The court declined to treat the addendum as a sanction. It also denied the requests for attorney’s fees, investigation costs, and monitoring costs. The court cited Pollak’s lack of willfulness, her immediate remedial steps, the short duration of the violation, the minimal prejudice shown, and the availability of measures short of financial sanctions.

Richards’s Cross-Motion

The court denied Richards’s request for sanctions under Rule 37(b), which applies when a party fails to obey a discovery order. The court found that Defendants engaged in some discovery gamesmanship by delaying production of damages-related documents and attorney invoices. But it concluded that Defendants had not strictly violated a court order.

As to Judge Seibel, the court found that Richards had conflated an order stating that discovery could begin with an order denying a partial stay or requiring production of damages-related documents. The court concluded that Judge Seibel had neither denied a partial stay nor ordered production of those documents. As to Judge McCarthy, the court found that questions asked during a conference were not a directive to produce attorney invoices; the minute entry said that the court had heard arguments and reserved ruling.

The court also denied fee-shifting under Rule 37(a), which can require payment of expenses incurred in obtaining an order compelling discovery. Although Defendants’ conduct caused unnecessary delay, the court found that their request for a partial stay was not entirely baseless and that their concerns about the attorney-client privilege dispute gave them some justification for delaying production of the invoices. The delays were not sufficiently egregious to justify shifting fees.

Disposition

Judge Victoria Reznik denied the parties’ cross-motions for Rule 37 sanctions and directed the Clerk of Court to terminate the related letter motions at ECF Nos. 105 and 107.