Diamond Consortium, Inc. v. Hammervold
386 F. Supp. 3d 904
| M.D. Tenn. | 2019Background
- Plaintiffs (The Diamond Doctor and David Blank) issued a subpoena from a Texas court for third-party Boaz Ramon (Nashville jeweler) to produce documents and sit for a deposition in Nashville; Ramon moved to quash in the Middle District of Tennessee.
- Ramon failed to appear for a December 17, 2018 deposition and did not produce documents; Magistrate Judge denied the motion to quash and ordered Ramon to produce documents by Jan 7, 2019 and appear for deposition between Jan 9–23, 2019 (default Jan 23).
- Counsel (Afsoon Hagh) and plaintiffs agreed the deposition would occur Jan 23 at 9:30 a.m.; plaintiffs’ counsel flew from Dallas to Nashville for that date.
- Ramon and Hagh did not appear on Jan 23; Hagh attempted to withdraw approximately 1.5 hours before the deposition and Ramon filed opposition to fee requests; plaintiffs moved for attorney’s fees/costs for both missed depositions.
- The underlying Texas action was voluntarily dismissed while motions for fees remained pending in Tennessee; the magistrate judge recommended awarding both fee motions; Ramon and Hagh objected to the recommendation.
- The district court reviewed de novo and sustained in part: vacated fees for the first missed deposition but awarded $5,265.00 (fees) and $2,531.92 (costs) jointly and severally against Ramon and Hagh for violating the magistrate judge’s December 28, 2018 order (the second missed deposition).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether dismissal of the Texas case moots plaintiffs’ fee motions | Fees motions remain timely in Tennessee and are independent collateral matters | Dismissal of underlying action adjudicated and mooted all relief, including these fee motions | Denied: dismissal did not moot motions; collateral fee motions may proceed in Tennessee |
| Whether court may award fees/costs absent a contempt finding or Rule-based sanction | Court may use inherent authority to compensate plaintiffs for losses caused by discovery misconduct | Fees improper without contempt finding or specific statutory/rule authority | Partially denied for first missed deposition (no prior Tennessee order); allowed for second (violation of magistrate’s December 28 order) |
| Whether inherent-authority sanctions require bad faith and order-hampering conduct | Plaintiffs contend conduct hampered court order and showed reckless/disrespectful behavior | Ramon/Hagh deny bad faith and contend no contempt-worthy violation of a Tennessee order for the first missed date; Hagh claims she did not disobey any court order | Applied Sixth Circuit test: no sanction for first missed date (no Tennessee order then); sanctions appropriate for second missed date (reckless disregard, hampered enforcement) |
| Whether Hagh may be personally sanctioned | Plaintiffs: Hagh’s last-minute withdrawal and scheduling communications facilitated the harm and caused wasted fees | Hagh: magistrate’s order was directed to Ramon only; she did not willfully disobey any court order | Held Hagh is liable: her conduct (scheduling assurances, late withdrawal) recklessly impeded enforcement and supports fee award |
Key Cases Cited
- Cooter & Gell v. Hartmarx Corp., 496 U.S. 384 (recognizing that fee/sanction proceedings are collateral and may be adjudicated after dismissal of underlying action)
- Chambers v. NASCO, Inc., 501 U.S. 32 (courts possess inherent authority to sanction bad-faith litigation conduct; use discretion and prefer rule/statute when applicable)
- Red Carpet Studios Div. of Source Advantage, Ltd. v. Sater, 465 F.3d 642 (6th Cir. 2006) (sanctions, including inherent-authority sanctions, remain within court authority after dismissal)
- First Bank of Marietta v. Hartford Underwriters Ins. Co., 307 F.3d 501 (6th Cir. 2002) (Chambers allows inherent-authority sanctions even if rules/statutes could apply)
- Metz v. Unizan Bank, 655 F.3d 485 (6th Cir. 2011) (no requirement of a full evidentiary hearing before imposing inherent-authority sanctions; fair notice and opportunity suffice)
- Williamson v. Recovery Ltd. P’ship, 826 F.3d 297 (6th Cir. 2016) (two-part test for inherent-authority sanctions: hampering enforcement of a court order and bad faith)
- Wu v. T.W. Wang, Inc., 420 F.3d 641 (6th Cir. 2005) (bad faith standard: intent to thwart proceedings or reckless disregard for their effect)
- U.S. ex rel. Pogue v. Diabetes Treatment Centers of Am., Inc., 444 F.3d 462 (6th Cir. 2006) (district where deposition is taken controls contempt enforcement for nonparty deponents)
- Brown v. City of Upper Arlington, 637 F.3d 668 (6th Cir. 2011) (court’s inherent power manages its own affairs, not those of another sovereign court)