MOTION to Compel

Here is a Motion to Compel filed by Spamhaus. There's some interesting stuff here.

1) Mr. Linhardt blew off a deposition in January. Meaning that the deposition was properly noticed, but he just failed to show up. No reason for his non-appearance seems to have been provided. This is most definitely NOT a good thing for the judge to be finding out from e360's viewpoint.

2) All of Spamhaus' attempts to obtain discovery of documentation of how e360 arrived at its conclusion that they are due US$11M have been thwarted. It appears that e360 responded to the discovery requests some 3 months LATE and, even though normally missing the 30 day deadline constitutes a waiver of all objections they are objecting to numerous requests. Those objections, amazingly enough, include that the requests are better handled in "oral discovery" -- like maybe that deposition that e360 completely failed to show up for, hmmm?

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IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

E360INSIGHT, LLC,
an Illinois Limited Liability Company, and
DAVID LINHARDT, an individual
Plaintiffs,

v.

THE SPAMHAUS PROJECT,
a company limited by guarantee and
organized under the laws of England, aka
THE SPAMHAUS PROJECT LTD,
Defendant.

DEFENDANT THE SPAMHAUS PROJECT'S MOTION (1) TO COMPEL COMPLETE DISCOVERY RESPONSES AND (2) FOR EXTENSION OF TIME TO COMPLETE DISCOVERY

Defendant The Spamhaus Project ("Spamhaus"), through its attorneys, hereby moves this Court for the entry of an order (1) compelling Plaintiffs e360Insight, LLC ("e360") and David Linhardt to fully respond to Spamhaus' First Set of Interrogatories and First Request for Production of Documents and finding that Plaintiffs have waived any and all objections to Spamhaus' outstanding discovery requests, and (2) extending the time to complete fact discovery, and all other dates, for 90 additional days. In support of this motion, Spamhaus states:

Introduction

Since November 2007, Spamhaus has been diligently trying to discover the fundamental facts behind Plaintiff's $11 million damages claim for lost profits. We served basic interrogatories and document requests on Plaintiffs on November 30, 2007. As we reluctantly file this motion -- over 3 months past the due date for Plaintiffs' responses, despite repeated e-mail requests and several Rule 37.1 conferences, and near the end of the discovery extension
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Plaintiffs sought -- Plaintiffs have never provided a written response to our document requests under Rule 34. Indeed, after repeated requests, and after Plaintiffs specifically represented to Your Honor that they would make a document production by February 28, 2008, we finally received the first production -- woefully incomplete, at a mere 158 pages, and missing many categories of requested documents -- just late last week, on April 18, 2008, just ten days before the extended discovery Plaintiffs requested was set to close. Similarly, plaintiffs simply missed deadline to respond to our interrogatories by 20 days, and instead of providing the basic information requested about their claims, attempted to assert objections -- objections that have been waived under Rule 34(b)(4) by Plaintiffs' failure to timely assert them.

We bring this motion most reluctantly. We generally view discovery motions as a waste for all involved and attempt to work with opposing counsel to obtain the information we need. We have tried to do that here. But our problem here is not negotiating the finer points of the scope of the document requests, which we are still prepared to do. Rather, it is the complete default of Plaintiffs, despite repeated requests and promises to provide information. At this point, given the limited time remaining in discovery, we determined that we need to bring this to the Court's attention, and seek appropriate relief and an extension of time for us to complete discovery once Plaintiffs comply with their basic obligations.

Factual Background

Based on the Seventh Circuit's ruling that "a more extensive inquiry into the damages to which e360 is entitled" is required, this Court granted discovery on the issue of damages. e360 Insight, LLC v. The Spamhaus Project, 500 F.3d 594, 603 (7th Cir. 2007); December 5, 2007 Order. On December 5, 2007, this Court ordered a close of fact discovery on February 28, 2008. Because, as described below, Plaintiffs were unable to provide any substantive discovery before mid February 2008, on February 28, 2008, they sought a discovery extension,
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which we did not oppose (although we asked for some modifications from the order Plaintiffs sought). On February 14, 2008, the Court granted the motion, and fact discovery is currently set to close on April 28, 2008.

Because Plaintiffs sought and received an extension of discovery in February, much of the history of Spamhaus' efforts to obtain basic information about Plaintiffs' claims has already been relayed to the Court. (We attach our prior response (without exhibits), which details events before February 13, 2008, as Exhibit 1.) Here, we summarize the relevant events:

11/30/2007 Spamhaus serves First Requests for Production of Documents and First Set of Interrogatories on Plaintiffs (Ex. 2)

12/5/2007 Spamhaus serves on Plaintiffs deposition notices calling for the deposition of Linhardt and Rule 30(b)(6) deposition of e360 on January 7 and 8, 2008

1/2/2008 Plaintiffs' responses to written discovery are due; Plaintiffs fail to provide any responses

1/03/2008 Spamhaus' counsel emails Plaintiffs' counsel requesting discovery responses (Ex. 4)

1/07-08/2008 Plaintiffs fail to appear for their depositions; they do not object to the notices or ask to arrange a different time

1/08/2008 Spamhaus' counsel leaves a voicemail for Plaintiffs' counsel requesting discovery responses

1/10/2008 Spamhaus' counsel emails Plaintiffs' counsel requesting discovery responses (Ex. 5)

1/14/2008 Spamhaus' counsel emails Plaintiffs' counsel requesting discovery responses (Ex. 6)

1/15/2008 Spamhaus agrees to delay filing a motion to compel based on Plaintiffs' representations that responses would be forthcoming by 1/18/2008 (Ex. 7)

1/22/2008 Because responses were not received, Spamhaus' counsel contacted Plaintiffs' counsel requesting responses (Ex. 8)

1/22/2008 Plaintiffs provide untimely responses to interrogatories which assert objections and provide almost no substantive information (Ex. 9)

1/24/2008 Spamhaus' counsel emails Plaintiffs' counsel detailing deficiencies in Plaintiffs' Response to Spamhaus' First Set of Interrogatories (Ex. 10)

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1/30/2008-2/04/2008 Spamhaus' counsel made multiple attempts to contact Plaintiffs' counsel regarding Plaintiffs' failure to respond to Spamhaus' document requests (Ex. 11)

2/8/2008 Plaintiffs move for extension of discovery, incorrectly stating that both parties "have exchanged written discovery" and failing to advise the Court that they are in default on their answers (Ex. 12)

2/14/2008 The parties appear before Your Honor; Plaintiffs represent they will make a document production prior to February 28, 2008; fact discovery is extended to April 28, 2008 (Ex. 13)

2/28/2008 Plaintiffs again fail to make any document production

4/2/2008 The Court enters an agreed protective order (Ex. 14)

4/10/2008 Spamhaus' counsel emails Plaintiffs and seeks discovery responses and/or a Local Rule 37.2 conference, asking for a response by 4/12/2008 (Ex. 15)1

[1 We recognize that there is a gap during which Spamhaus waited, in good faith, to receive Plaintiffs' long overdue requests. Unfortunately, Carrie Fino, the lawyer principally responsible for the day-to-day defense of the case, was very ill for a couple of weeks in February and March and was out of the office. Spamhaus had no deadlines to comply with itself during this time period, but we recognize that Plaintiffs' continued and complete default could have been brought to the Court's attention earlier, and we apologize that it was not.]

4/12/2008 Plaintiffs' counsel fails to provide any discovery or respond to the request for a Local Rule 37.2 conference

4/14/2008 Spamhaus' counsel reaches Plaintiffs' counsel by telephone and asks for a firm date for a complete document production and agreement to extend fact discovery; Plaintiffs' counsel indicates he will confer with colleagues but then does not respond to requests (Ex. 16)2

[2 Under Local Rule 37.2, Counsel previously met in person, on February 5, 2008, in an attempt to resolve their differences. Counsel make an informal agreement not to pursue mutual motions to compel at that time to see whether the discovery provided by Plaintiffs would satisfy Spamhaus' needs. (Plaintiffs have also served discovery and disagree with the objections Spamhaus has interposed.) However, as Plaintiffs have completely failed to provide any documents until just before discovery is set to close, in a telephone conversation on April 14, 2008, David Jimenez-Ekman requested that Daniel J. Peters agree to a firm date certain to complete document productions, and an extension of discovery. Mr. Peters did not respond to that oral request (followed by an e-mail) and, given that the fact discovery close looms, Spamhaus cannot wait any longer to bring this issue to the attention of the Court. Based on the above, pursuant to Local Rule 37.2, counsel for Spamhaus states that that after consultation in person or by telephone and good faith attempts to resolve differences they are unable to reach an accord.]

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The document production that Plaintiffs made last week is totally insufficient to support their claim. As the Seventh Circuit's made clear in its opinion in this case, e360 Insight, LLC f. The Spamhaus Project, 500 F.3d 594, 603 (7th Cir. 2007), Plaintiffs were required to present documentary evidence in order to support their damages claims -- Mr. Linhardt's affidavit alone did not "provide the requisite 'reasonable certainty'" to support Plaintiffs' damages claim.3 The Plaintiffs have a duty to support their damages claim -- a claim Mr. Linhardt made under oath in his affidavit -- with documentary evidence if they hoped to prevail and prove they were entitled to damages.

[3 “Under the law of this circuit, judgment by default may not be entertained without a hearing on damages unless ʻthe amount claimed is liquidated or capable of ascertainment from definite figures contained in the documentary evidence or in detailed affidavits.ʼ Dundee Cement Co. v. Howard Pipe & Concrete Prods., Inc., 722 F.2d 1319, 1323 (7th Cir. 1983). Mr. Linhardtʼs affidavit is a conclusory statement of the lost value of his business, based largely on his calculations of lost future profits . . . That is, the affidavit claims profit loss in absolute numbers, but provides no information whatsoever to support a finding that such future profits were certain prior to Spamhausʼ act. Particularly given the difficulties that Illinois courts have acknowledged in proving nonspeculative amounts of lost future profits, see, e.g., SK Hand Tool Corp. v. Dresser Indus., Inc., 672 N.E. 2d 341, 348 (Ill App. Ct. 1996); see also TAS Distrib. Co. v. Cummins Engine Co., ___ F.3d ____, 2007 WL 1704114, No. 05-1371, slip op. at 12 -16 (7th Cir. June 14, 2007) (collecting Illinois authority on the difficulty of proving lost future profits as damages), this affidavit alone cannot provide the requisite ʻreasonable certaintyʼ for a damages aware without the necessity of a hearing.” 500 F.3d at 600.]

Although Plaintiffs have now provided some documents over 100 days past the due date for their responses to document production, the documents provided do not provide any data or figures on which Plaintiffs rely on for their damages claim. Rather, Plaintiffs provided conclusory spreadsheets totaling damages without any support or explanation for the source of their numbers. The documents provided contain invoices from Plaintiffs to two entities,4 but are completely devoid of any evidence regarding contractual termination or Spamhausʼ role in such termination, if any.

[4 To comply with the Protective Order in this case, we do not name the third parties at issue.]

Additionally, the documents provided regarding Plaintiffsʼ interactions with other companies also fails to support their damages claims. For example, the documents relating to the termination of contracts do not support the contention that the contracts were terminated because of Spamhaus. Rather, an email chain from one vendor demonstrates that Plaintiffs were terminated because of complaints about unsolicited emails. Although Plaintiffs provided that vendor with “opt-in information” for the individual that complained, the vendor still discontinued Plaintiffsʼ service pursuant to itʼs Acceptable Usage Policy. Plaintiffsʼ failure to provide any evidence of damages is the exact deficiency that the Seventh Circuit held required the parties and the Court to revisit the issue of damages. e360 Insight, LLC v. The Spamhaus Project, F.3d 594, 603 (7th Cir. 2007).

ARGUMENT

“Throughout the range of the law, there are time limits imposed on litigants at every stage of the case: some are mandatory and admit of no deviations; others are more flexible. But in each instance, lawyers who do not pay heed to deadlines do so at

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substantial peril to their and their clientsʼ interests.” Autotech Technologies Ltd. Pʼship v. Automationdirect.com, Inc., 236 F.R.D 396, 399 (ND Ill. 2006). As the above litany of events demonstrates, Spamhaus has been both patient and diligent in seeking Plaintiffsʼ responses to its discovery requests and have diligently complied with their responsibilities in discovery during this case. For whatever reason, Plaintiffs have completely defaulted on their obligations, and Spamhaus has not been provided the basic information to which it is entitled to defend itself.

I. The Court Should Compel Complete Discovery Responses and Document Productions, And Enter a Finding of Waiver Under Federal Rule of Civil Procedure 33(b)(3) and 34(b)

Under Fed. R. Civ. P. 37(a), a party may move for an order compelling disclosure or discovery when another party has failed to make disclosure or discovery. For purposes of Rule
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37(a), “an evasive or incomplete disclosure, answer, or response must be treated as a failure to disclose, answer, or respond.” Fed. R. Civ. P. 37(a)(4). A court may grant a motion to compel where a party response to discover requests by providing insufficient responses in an untimely manner. Johnson v. Kakvand, 192 F.3d 565, 658 (7th Cir. 1999) (upholding a motion to compel where the defendants responded to document requests five months late with incomplete responses); Shapo v. Engle, 2001 WL 629303, at *7 (N.D. Ill. May 25, 2001) (granting a motion to compel where party was uncooperative in responding to document requests and interrogatories). A motion to compel is also appropriately granted where a party responds to discovery in a manner intended to delay discovery. Swift v. First USA Bank, 1999 WL 1212561, at *7 (N.D. Ill. Dec. 15, 1999) (granting a motion to compel where a party responded to document requests with boilerplate objections, which the court deemed “baseless, often abused litany, the result of which is merely to delay discovery and the prosecution of this case by weeks, if not months”).

Plaintiffs have untimely and inadequately responded to Spamhausʼ First Set of Interrogatories and Spamhausʼ First Request for the Production of Documents. Spamhaus has attempted to resolve this discovery dispute without involving the Court. However, despite Spamhausʼ diligent efforts, Plaintiffs have still failed to comply with their discovery obligations. As a result, this Court should compel Plaintiffsʼ response to the First Request for the Production of Documents and First Set of Interrogatories.

Although Plaintiffs provided a “response” to Spamhausʼ First Set of Interrogatories, the response was provided 20 days after the date established in the Federal Rules. The response did not provide any of the basic substantive information on Plaintiffsʼ damages claims and instead asserted objections, objections which were improperly taken, but, more importantly, have been
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waived. Additionally, although Plaintiffs provided “documents” on April 17, 2008 -- over 100 days past the due date for the response to Spamhaus First Request for Production of Documents -- they failed to respond in writing to Spamhausʼ First Request for Production of Documents and produced non-responsive documents void of any basis for their damages claim. Plaintiffs did not request, nor did Spamhaus agree to, an extension of the due date. Instead, Plaintiffs simply disregarded the due dates, and have never offered any reason for their disregard. As a result, any objections to the discovery requests should be deemed waived.

Both Fed. R. Civ. P. 33(b)(3) and 34(b) require written responses to interrogatories or document requests, respectively, to be served within 30 days after the service of the request. Rule 33(b)(4) further states (emphasis supplied) that “[a]ny ground [for an objection] not stated in a timely objection is waived unless the partyʼs failure to object is excused by the court for good cause shown.” And while the text of Rule 34 does not include an analogous automatic waiver provision, “courts are uniform in their interpretation of [Rule 34] as permitting a finding of waiver where objections are not timely made and the objector cannot show good cause for the delay.” Autotech, 236 F.R.D at 398 n.2 (citing Fonville v. District of Columbia, 230 F.R.D. 38, 42 (D.D.C. 2005); McCormic v. City of Lawrence, Kansas, No. 02-2135, 2005 WL 1606595 at *4 (D. Kan. July 8, 2005)).

“Failure to timely assert objections to discovery requests may result in a waiver of all objections that could have been seasonably asserted.” Autotech, 236 F.R.D at 398; Poulos v. Naas Foods, Inc., 959 F.2d 69, 74 (7th Cir. 1992) (noting that party had “already waived any objection to production by failing to object when disclosure was due”); Marx v. Kelly, Hart & Hallman, P.C., 939 F.2d 8 12 (1st Cir. 1991). In this case, the waiver of Plaintiffsʼ objections to
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Spamhausʼ discovery requests is an appropriate remedy for their failure to follow the time limits imposed by Federal Rules. Additionally, Plaintiffs have not offered any excuse or good cause for their flagrant delay in responding to Spamhausʼ discovery requests. “Generally, in the absence of an extension of time or for good cause, the failure to object to interrogatories within the time fixed by the rule, constitutes a waiver of any objection.” United States v. 58.16 Acres of Land, More or Less, in Clinton County, State of Illinois, 66 F.R.D. 570, 572 (E.D. Ill. 1975). Plaintiffs have not provided Spamhaus with any reason to justify their delays in responding to Spamhausʼ discovery requests and therefore Plaintiffs' delinquency should not be excused. (Indeed, it is hard to even hypothesize any excuse for waiting more than 100 days to respond to a request for document discovery after it has been brought to counselʼs attention numerous times.)

Moreover, the posture of this case makes Plaintiffsʼ failure to timely respond to discovery even more troubling. Plaintiffsʼ Motion for Default Judgment, filed almost 21 months ago on August 30, 2006, included an affidavit by David Linhardt, stating under oath that Plaintiffs had suffered (1) loss of revenue from cancelled active and pending contracts of $2.465 million and (2) lost prospective business opportunities, enterprise value and reputational damage in the amount of $9.25 million. Presumably, counsel's duties required counsel to conduct a proper investigation of the basis for these claims (including supporting documents) before filing any affidavit in August 2006. And yet now in the course of discovery in relation to Plaintiffs' damages claims, Plaintiffs are unable to timely provide any evidence to support the assertion made under oath in an affidavit to this Court. If Plaintiffs were able to make sworn statements that their damages exceeded $11 million in August 2006, the evidence and documentation used to make that determination should have been provided months ago.

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Plaintiffs should be compelled to fully respond (without objections) to both Spamhaus' First Request for Production of Documents and First Set of Interrogatories, be ordered to make a complete production date certain, and sit for their depositions as first noticed in December 2005.5

[5 Because Plaintiffsʼ conduct involves a total and unexcused failure to respond, we believe that an award of fees under Rule 37(a)(5) would be appropriate because Plaintiffsʼ position is not substantially justified. However, Spamhaus' counsel is handling the matter pro bono and is not seeking fees at this time.]

II. The Court Should Extend the Time to Complete Fact Discovery.

The court should extend time to complete fact discovery, and all other dates, for 90 additional days. Due to Plaintiffsʼ failure to provide timely responses to Spamhaus' discovery requests, discovery in this case has essentially been halted. As discussed above, any and all of Plaintiffsʼ objections should be deemed waived, and Plaintiffs must make full responses. As a results, discovery cannot be completed within the existing cutoff. Additional time is needed for Spamhaus to receive "complete" responses to its discovery requests and conduct its own fact investigation based on those responses.

For example, Spamhaus noticed depositions for both e360 and David Linhardt. However, without seeking a protective order or making any prior arrangements, Plaintiffs simply failed to appear and sit for a deposition. After having an opportunity to review complete discovery responses, Spamhaus plans to take the deposition of David Linhardt and a Rule 30(b)(6) witness.

We recognize that 90 days is a considerable period. However, based on the documents provided on April 17th, 2008 (and presumably, those to be provided when the production is complete), Spamhaus needs to serve additional subpoenas on at least six third-party vendors named in that discovery. Counselʼs experience is that obtaining discovery from third parties can
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be time consuming and counsel desires to minimize the possibility of any further requests for an extension based on issues we encounter with third parties.

Respectfully submitted,

THE SPAMHAUS PROJECT

By: David Jimenez-Ekman
Craig C. Martin
David Jimenez-Ekman
Carrie A. Fino
JENNER & BLOCK LLP
330 Wabash Avenue
Chicago, IL 60611