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Miller v. Rodriguez

United States District Court, D. New Jersey

November 17, 2017

RICHARD MILLER, et al. Plaintiffs,
DAVID RODRIGUEZ, et al. Defendants.



         This matter comes before the Court on a motion for sanctions by non-parties William Krause, Ellen Barag, and HiReli LLC (collectively, the “Third Parties”). The Third Parties move pursuant to Federal Rule of Civil Procedure 37(a)(5)(B) and “the Court's inherent powers” for an award of attorneys' fees and costs incurred in responding to a motion by Defendants to compel compliance with two subpoenas. On August 18, 2017, the Court conducted a hearing that was originally scheduled to address both the motion to compel and the motion for sanctions. However, at the hearing the parties advised the Court that they had resolved the issues underlying the motion to compel, and that motion was withdrawn. For the reasons below, the Third Parties' motion for sanctions is denied.

         I. BACKGROUND

         In February 2017, Defendants' counsel engaged a process server, Guaranteed Subpoena, to serve a deposition and document subpoena directed to HiReli LLC (“HiReli”) on Mr. Krause at his home in Blue Bell, Pennsylvania. Tr. 67:16 to 68:1.[1] After receiving the subpoena (the “February subpoena”), Mr. Krause emailed Defendants' counsel to advise that “[t]he subpoena received appeared to be a copy of a single cover page” that referenced, but did not include, an “Attachment A.” ECF No. 22-1 at Ex. A. In that email, Mr. Krause stated that he assumed that the reference to “Attachment A” was boilerplate so he was taking no action other than to “hold[] the date” for the deposition. Id.

         Defense counsel responded to Mr. Krause and, while noting that the process server's affidavit stated that both the subpoena and attachment had been served, emailed Mr. Krause and HiReli's counsel a copy of both the subpoena and the attachment. Id. Ex. B. After receiving a copy of the attachment, Mr. Krause emailed defense counsel requesting a three-month extension of time to respond because the documentation requested was “extensive”. Id. at Ex. C. Defense counsel and HiReli's counsel then conferred regarding a new return date. Defense counsel was agreeable to a two-week extension, but it does not appear that agreement on a firm date was ever reached. See Id. at Exs. D-E.

         Two weeks later, having received no response to the original subpoena, Defendants' counsel engaged a second process server, DRG Legal, to re-serve the subpoena on Mr. Krause/HiReli. Tr. 69:17-18. Defendants also directed DRG Legal to serve a deposition subpoena on Ms. Barag at the same address. Ms. Barag is Mr. Krause's wife and an officer of a corporation with a relationship to HiReli. After delivery of the subpoenas (the “March subpoenas”), DRG Legal provided Defendants' counsel with an affidavit attesting that service was effected on both individuals on March 24, 2017. Tr. 70:15-16.

         On April 4, 2017, defense counsel and counsel for the Third Parties communicated by phone regarding the subpoenas. Tr. 71:1-9; ECF No. 21-10 ¶ 5. At that time, counsel for the Third Parties advised defense counsel that due to a family funeral, Mr. Krause would be unable to attend his deposition, which was noticed for April 7, 2017. Defense counsel was agreeable to choosing a new date. On April 5, 2017, counsel for the Third Parties emailed defense counsel proposing to produce Mr. Krause for his deposition on May 2, 2017, but only if certain “conditions” were met. ECF No. 21-11. These conditions were that Defendants would depose only Mr. Krause (and not Ms. Barag) and that the Third Parties would produce documents responsive to only three of Defendants' ten document requests. Counsel for the Third Parties characterized this “offer” as “an effort to reach a productive compromise on [the] subpoenas, ” and stated the “reasoning” for this offer was that (1) “Bill's and Ellen's knowledge is largely duplicative”; (2) the “other topics” in the document request “are all materials in the possession of the parties [to the underlying litigation]” and have presumably been already subject to discovery in the course of the litigation; and (3) “it would be highly burdensome for [the Third Parties] to produce such materials.” Id. In an April 6, 2017 email rejecting this proposal, defense counsel stated that Defendants could not rely simply on a bare statement that Ms. Barag's and Mr. Krause's testimony would be duplicative and that, while there might be some overlap in document discovery, Defendants believed that HiReli was in possession of materials not in possession of any party. ECF No. 19-2 Ex. D. Defendants further stated that it was “not a compromise” for Ms. Barag “not to appear pursuant to a validly served subpoena.” Id.

         After further email exchanges the next day confirming that Defendants would not agree to the Third Parties' “compromise” regarding the subpoenas, counsel for the Third Parties asked defense counsel to send proof of service for the subpoenas. ECF No. 19-2 Ex. D. On April 7th, counsel for the Third Parties emailed defense counsel with “responses/objections to the subpoenas … purportedly served by Defendants on Ms. Barag and Mr. Krause.” ECF No. 19-2 Ex. E. The first of several objections was “lack of or improper service.” Tr. 76:25 to 77:6.

         On April 11, 2017, Defendants' counsel responded to the objections by letter and provided the Third Parties with declarations from the process server attesting to service. Counsel for the Third Parties responded by email on April 12th and stated that as long as Defendants continued to “refuse to negotiate … a solution by which [Defendants] could conduct reasonable discovery of [the Third Parties], the Third Parties would continue “to stand by their objections and defenses to [the] subpoenas.” ECF 21-13. In particular, counsel's email asserted that “there has been nothing close to actual and proper service here, ” and further alleged that Defendants' process server provided a “demonstrably false proof of service” because Ms. Barag and Mr. Krause were at their second home in Delaware at the time personal service was allegedly effected in Pennsylvania. Id. According to Ms. Barag, they received the subpoenas when they returned home from Delaware on March 28, 2017, finding them “sitting in a mail pile … brought in from [the] mailbox.” Tr. 44:19-21.

         Defense counsel contacted their process server regarding the alleged service upon the Third Parties, and on April 12th provided the Third Parties' counsel with work orders from the process server, executed at the time of service, that contained accurate physical descriptions of Ms. Barag and Mr. Krause. Id. In response, counsel for the Third Parties argued that it was “not surprising” that the process server “knows what Mr. Krause and Ms. Barag look like” because “he served them” with the first subpoena in February. ECF No. 22-1 Ex. H. He further provided defense counsel with a copy of a receipt from a restaurant in Delaware, timestamped 8:45pm March 24, 2017, that, according to the Third Parties, was evidence that they were not in Pennsylvania on the evening service was purportedly made. Id.

         Defendants' counsel remained unconvinced, and in her email response pointed out that the process server engaged to serve Ms. Barag and Mr. Krause in March (DRG Legal) was not the same process server that delivered the subpoena in February (Guaranteed Subpoena).

         Counsel further asserted that the fact that Ms. Barag and Mr. Krause “may or may not have had dinner in Delaware approximately 2.5 hours [after service was allegedly made] and then remained at their vacation home for several days is not inconsistent with the process server's statements.” ECF No. 22-1 Ex. I. Finally, defense counsel pointed out that Ms. Barag and Mr. Krause live in a private, gated community, and the process server would not have been permitted entry at the security gate unless the guard had received permission from Ms. Barag or Mr. Krause.

         Finally, in what appears to be the last communication in a long string of emails, on April 13, 2017, counsel for the Third Parties emailed Defendants' counsel EZ Pass records and a series of security camera photos allegedly showing activity at the Delaware home as further support for the contention that Ms. Barag and Ms. Krause were not in Pennsylvania at the time in dispute. According to the Third Parties, this evidence showed that Mr. Krause and Ms. Barag left their Blue Bell home the morning of March 24th to travel to their Delaware home and did not return to Blue Bell until March 28th.

         There appears to be no responsive email from defense counsel. However on May 4, 2017, Defendants filed a motion to compel the Third Parties' compliance with the subpoenas. Defendants' motion to compel relied primarily upon the declaration of Christopher Lemerise, an employee of DRG Legal. In his declaration, Mr. Lemerise states that he personally served Mr. Krause ...

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