In DR Distribs., LLC v. 21 Century Smoking, Inc., No. 3:12-cv-50324 (N.D. Ill. June 5, 2024), Illinois District Judge Iain D. Johnston calling the case “the oldest rat in the barn”, finally issued terminating sanctions against defendants 21 Century and Brent Duke after “numerous court orders—many of them caused by Duke’s misconduct.” Judge Johnston focused on the critical facts leading to the sanctions, “[i]n an attempt to avoid another War and Peace opinion”.

Case Discussion and Judge’s Ruling

Judge Johnston opened the case with this statement: “By far, this case is the oldest rat in the barn. Resolution of this case has been repeatedly stymied by Brent Duke’s actions and inaction. Extreme prejudice resulted—to Plaintiff, to the Court, and to the other litigants attempting to have their cases resolved. Too much time and energy and too many resources have been unnecessarily spent on this case. The litigation in this case has resulted in numerous court orders—many of them caused by Duke’s misconduct. This order will be the Court’s last. The Court is entering case-terminating sanctions. Two separate motions filed by Plaintiff necessitate this result. The first motion is based upon Plaintiff’s demand that Duke pay the $1,263,372 Duke owes Plaintiff on account of the Court’s first sanctions order…The second motion is based upon Duke’s additional misconduct, including, but not limited to, withholding 20 bankers boxes of physical documents…Some of the relevant facts dovetail for the analysis for both motions. But independently the motions provide their own bases for the sanctions imposed here—default on Plaintiff’s claims and dismissal of Duke’s counterclaims. Each motion would provide an independent basis for case-terminating sanctions. When combined, the motions provide even more grounds for case-terminating sanctions. Of course, the actions and inaction that have resulted in this order can’t be viewed in a vacuum. The Court must look to not only the straw that broke the camel’s back, but the bales that preceded it.”

Here are some of the notable statements and observations from Judge Johnston in his ruling:

“Shortly after the Court entered the sanctions order, in February of 2021, the existence of 20 bankers boxes of hard copy documents (tangible documents) arose.” The sanctions order was covered here and here by eDiscovery Today.

“As to the 20 bankers boxes, Duke’s current counsel made several representations, based in turn on representations Duke had made to him; he informed the Court that he did not “have any reason to believe there are documents that weren’t produced, but [he was] not really in a position to figure out in the short term what was produced.”…(N.B.: The representation that the documents had been produced was false. As will be shown later, the 20 bankers boxes of documents contained thousands of documents that had not been previously produced.)”

“After the parties briefed the fee petition, on October 6, 2022, the Court awarded $2,526,744.76 in attorneys’ fees and costs…Duke was required to pay 50% of that amount: $1,263,372. Duke has not paid the fee award, even after this Court entered an order months ago requiring him to immediately pay the monetary sanctions.” That award was covered here by eDiscovery Today.

“Duke has taken no actions whatsoever to pay the monetary sanction. Before the Court required him to do so, Duke had not investigated obtaining a bond or litigation funding to pay the monetary sanction. Duke has never attempted to create a payment plan. Duke has taken no actions to set up a savings program to pay the monetary sanction.”

“in this circumstance, the party’s failure to pay is plainly contumacious, which allows for the most severe sanctions.” {Note: “contumacious” means “stubbornly or willfully disobedient to authority”. I didn’t know that, so I thought I would define it for others that don’t either. 😉}

Judge Johnston also rejected Duke’s contentions that he had meritorious counterclaims against Plaintiff, finding that 1) evidentiary sanctions already assessed plus evidentiary sanctions to come for additional misconduct “would further weaken his case”, 2) “the production of the previously withheld ESI has provided significant evidence undermining Duke’s case”, 3) “the bonding and litigation companies’ reactions show Duke’s case lacks merit. When a bonding company requires 100% cash collateral to post a bond, that speaks volumes”, and 4) “this Court’s own view of the probable merits of Duke’s case is consistent with the market.”

Judge Johnston found that Rule 26(g) was violated (“Duke’s actions and inaction were the antithesis of objective good faith.”) and Rule 16 and Rule 26(e) were violated (“The Court warned the parties that 26(e) date and fact discovery cut-off date would not be extended. Despite the Court’s explicit scheduling order, Duke failed to correct and supplement the responses to the production requests. Tens of thousands of responsive documents existing at the time of production were not produced. And, on top of that, between the time of the production requests and the Rule 26(e) cut-off date, additional responsive documents were generated that were not produced either.”)

As a result, in finally issuing terminating sanctions, Judge Johnston stated: “No court should be expected to play Charlie Brown to a litigant’s Lucy, gullibly trusting that—despite the litigant’s pattern of behavior—the litigant will change its ways. Instead, a court is entitled to take swift action…In this case, before taking swift action, the Court tried lesser sanctions. Clearly, those sanctions failed to have any impact on Duke. Default and dismissal are warranted.”

Hat tip to Matt Linehan for the heads up on this story!

So, what do you think? Are you surprised that terminating sanctions were issued or are you surprised that it took so long for them to be issued? Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant, an Affinity partner of eDiscovery Today.

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