Bass, Berry & Sims attorney Chris Lazarini provided insight on the decision in Tourmaline Partners, LLC vs. Monaco, a case in which the Magistrate Judge imposed less onerous sanctions for discovery abuse by a pro se Defendant than those requested by Plaintiff, but stopped short of allowing Defendant to withdraw or amend his responses to Plaintiff’s requests for admissions. Chris provided the analysis for Securities Litigation Commentator. The full text of the analysis is below and used with permission from the publication. If you would like to receive additional content from the Securities Litigation Commentator, please click here to sign up for the newsletter.

Tourmaline Partners, LLC vs. Monaco, No. 3:13 CV 108 (D. Conn., 9/23/14)

*A court may, in its discretion, allow a party to withdraw or amend his responses to requests for admissions if (a) the moving party shows that upholding the admissions would practically eliminate the presentation of evidence on the merits and (b) the opposing party fails to show that it will be prejudiced by the withdrawal or amendment. **A court may, in its discretion, sanction a party for failing to abide by a discovery order, with such sanctions ranging from reimbursement of costs and fees to an order of dismissal or default, but such drastic measures as dismissal or default may not be warranted if the violations were not willful or in bad faith.

The backdrop of this case is Defendant broker’s alleged violation of his non-compete/non-solicit agreement with Plaintiff broker-dealer. Early on in the matter, Defendant’s first counsel withdrew and Defendant proceeded pro se. After Defendant failed to respond to Plaintiff’s first set of interrogatories and requests for production, the District Court granted Plaintiff’s motion to compel. Despite the court order, defendant still did not respond to the outstanding discovery. Plaintiff then filed its Motion for Contempt under Fed. R. Civ. P. 37, seeking sanctions and attorney’s fees. The matter was referred to the Magistrate Judge, who conducted a telephonic hearing during which Defendant apologized for his inattention to discovery and claimed that he had not received timely notice of the hearing because his German Shepherds would not allow the UPS delivery person to enter his yard. The Judge reserved decision on the Motion for Sanctions and directed Defendant to respond to the outstanding discovery. Defendant finally responded, but in a matter wholly unacceptable to Plaintiff, causing Plaintiff to seek a ruling on the Motion for Contempt. Before the hearing, Defendant, finally represented by new counsel, moved to withdraw his late-filed responses to Plaintiff’s requests for admissions.

The Magistrate Judge first examines the history of the case and the non-exclusive, discretionary list of sanctions in Fed. R. Civ. P. 37 that may be imposed on a party who fails to abide by a discovery order. Even though Defendant missed every scheduled deadline, failed to file pleadings responsive to Plaintiff’s various motions, failed to comply with the district court’s order directing him to respond to discovery and caused the delay of the case, the Court concludes that Defendant has not acted willfully or in bad faith and, therefore, declines to enter a default judgment against him. Rather, the Court fashions a less onerous sanction, limiting Defendant to his existing discovery responses, deeming all his objections to discovery waived and disallowing him from offering a defense based on discovery materials not produced to date. The Court also awards Plaintiff its attorneys’ fees for the efforts expended by its counsel in trying to obtain Defendant’s compliance with discovery deadlines and orders.

Turning to Defendant’s motion to withdraw his responses to Plaintiff’s requests for admissions, the Court notes that Fed. R. Civ. P. 36(b) permits admissions to be withdrawn if (a) the moving party shows that withdrawal would promote the presentation of the merits of the action and (b) the opposing party shows the court that it will be prejudiced if the withdrawal is allowed. On both points, the Court finds against Defendant and, accordingly, denies Defendant’s motion, holding him to his earlier admissions.

The Magistrate Judge’s tolerance for the pro se Defendant’s actions is an example of the preference among courts that disputes be resolved on their merits rather than by default.