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Del. Discovery Updates 2018: Little Tolerance for Failure To Adhere to Deadlines

September 19, 2018Articles Delaware Business Court Insider

Both the Delaware Court of Chancery and the Delaware Superior Court emphasize that discovery must proceed in a timely manner in accordance with the scheduling order entered by the court. Litigants who delay in bringing their discovery disputes before the court may find themselves without a remedy. Similarly, the courts are showing little tolerance for a failure to adhere to deadlines or to communicate effectively with opposing counsel or the court. This review focuses on the pitfalls that busy litigators can avoid.

Motions to Compel Must Be Brought in a Timely Manner

Recent case law continues to highlight the importance of bringing discovery misconduct to the attention of the court through a motion to compel. This practice is in keeping with the Delaware Supreme Court’s guidance in Christian v. Counseling Resource Associates, 60 A.3d 1083 (Del. 2013). In that case, the Supreme Court cautioned that, “If one party misses a discovery deadline, opposing counsel will have two choices—resolve the matter informally or promptly notify the court.” Further, “If the party chooses to not involve the court, that party will be deemed to have waived the right to contest any late filings by opposing counsel from that time forward.”

K & G Concord v. Charcap,(Del. Ch. June 28, 2018), is illustrative. In that case, Vice Chancellor Tamika Montgomery-Reeves denied the defendant’s post-trial motion for fee shifting. The motion was based, in part, on a plethora of discovery abuses reportedly committed by plaintiffs counsel. According to the defendants, the plaintiffs counsel made numerous speaking objections during depositions, directed a witness not to answer deposition questions, attempted to stop a deposition shortly after it began, served subpoenas with no notice of deposition dates and refused to move such dates, missed every deadline in the case scheduling order, chose document discovery search terms without defendant’s input and repeatedly threatened Defendant’s counsel with sanctions.

The court observed, “The issue of discovery abuse, including lack of civility and professional misconduct during depositions, is a matter of considerable concern to this court.” Notwithstanding the fact that the plaintiffs counsel’s conduct “flirted with a finding of bad faith and Rule 11 sanctions,” the court declined the defendants’ motion for attorney fees and costs. The court noted, the “defendants never moved to compel document production or otherwise raised the plaintiffs counsel’s alleged document discovery abuse before moving for sanctions.” The court also denied the plaintiffs’ cross-motion for attorney fees because the defendants’ motion was not baseless in light of the plaintiffs counsel’s conduct.

Discovery Deadlines

Delaware trial courts continue to crack down on parties and counsel who fail to meet pretrial deadlines. If a litigant cannot meet a discovery deadline, then counsel must be proactive in seeking an extension and be prepared to explain the reasons that the extension is needed.

Failure to Adhere to a Discovery Schedule

In a recent case, the Court of Chancery cautioned, “Parties must be mindful that scheduling orders are not merely guidelines but have the same full force and effect as any other court order,” as in In re ExamWorks Group Stockholder Appraisal Litigation, (Del. Ch. Feb. 21, 2018). “A party that disregards the provisions in a scheduling order that govern discovery is engaging in discovery abuse.”

In ExamWorks, Vice Chancellor J. Travis Laster provided a detailed analysis of the parties’ obligations regarding scheduling orders, deadlines, discovery conduct and privilege logs. An overview of the discovery timeline is appropriate. Six weeks after the close of discovery, and after depositions had been completed, certain petitioners produced nearly 70,000 pages of documents to the company. Ten weeks after the discovery cut-off, certain petitioners produced third-party documents to the company. Certain petitioners also delayed in producing their privilege logs, and some of the logs that were produced fell below the Court of Chancery’s standards for privilege logs.

The court described two levels of consequences for the missed discovery deadlines. The first level relates to the actual case. The company was prejudiced by the delay because the company could have used the belatedly produced documents in discovery, including in depositions. The second level of prejudice relates to the litigation process more generally. “People who follow the rules feel like chumps when others seem to be cutting corners or breaking rules and getting ahead.” Courts must address discovery abuse in order to protect the public and the bar, as well as the litigants to the case.

The court crafted a detailed set of penalties. Importantly, the court interpreted Court of Chancery Rule 37(b)(2) to require the mandatory award of fees unless the failure to comply with discovery obligations was “substantially justified.” The court postponed the trial date in order to provide the litigants with additional time to cure the discovery defects. As a consequence of the belated document production, certain petitioners were ordered to re-produce their witnesses for depositions and to bear all expenses associated with the delayed production. With respect to the belated and deficient privilege logs, the court found that privilege had been waived and ordered the production of documents that had been included on the logs. The court reiterated, “An improperly asserted claim of privilege is no claim of privilege at all.”

Counsel Risk Sanctions if They Do Not Communicate Effectively

Judge John Parkins recently imposed a fine upon counsel due to a failure to meet certain pretrial deadlines or to communicate with opposing counsel or the court, see McDaniel v. Cyntellex Series 8, (Del. Super. Ct. Aug. 8, 2018). In that case, the plaintiff failed to respond to discovery requests, to the defendant’s counsel’s inquiries regarding discovery or to defendant’s motion to compel. The plaintiff also did not comply with the court’s order granting the defendant’s motion to compel, and the plaintiff’s counsel did not communicate with the court regarding any uncooperativeness from his client or an inability to comply with the order. Following the plaintiff’s failure to comply with the order, defendant filed a motion to dismiss for failure to prosecute. After the motion to dismiss was filed, advised the court for the first time that counsel’s representation of the plaintiff had terminated two months prior and counsel moved to withdraw. The court noted that the plaintiff’s counsel advised the court during the motion to dismiss hearing that plaintiff had been unresponsive and uncooperative.

The court referred to this conduct as the “the worst example of lack of professionalism ever encountered by this Judge.” The court indicated that counsel should have communicated these issues with the court earlier in the proceedings and ought to have communicated with counsel for defendant regarding the same. The court denied the motion to dismiss because the court could not determine that the delay was caused by plaintiff himself, as opposed to counsel. Instead, the court ordered plaintiffs counsel to pay a fine of $500 and indicated that the court may dismiss the action if the plaintiff continued to fail to comply with the court’s orders.

Reprinted with permission from the September 19 issue of the Delaware Business Court Insider. (c) 2018 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.