Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Thomas v. FTS USA, LLC.

United States District Court, E.D. Virginia, Richmond Division

June 24, 2016

KELVIN M. THOMAS, et al., Plaintiffs,
v.
FTS USA, LLC, et al., Defendants.

          MEMORANDUM OPINION

          ROBERT E. PAYNE SENIOR UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on PLAINTIFF'S OBJECTION AND MOTION TO STRIKE (ECF No. 173). For the reasons set forth herein, the motion will be granted in part and denied in part.

         BACKGROUND

         On December 11, 2013, Plaintiff Kelvin Thomas ("Thomas") filed a class action complaint on behalf of himself and all others similarly situated, alleging that defendants FTS USA, LLC ("FTS"), and Unitek Global Services, Inc. (("Unitek"); collectively, "Defendants") had violated the Fair Credit Reporting Act ("FCRA"). (Complaint ("Compl.") (ECF No. 1)). The Complaint alleges four Counts under the FCRA. Counts One and Two allege violations of § 1681b (b) (2) (A) (i) and (ii), respectively. Section 1681b (b) (2) (A) provides that:

a person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer, unless: (i) a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and (ii) the consumer has authorized in writing (which authorization may be made on the document referred to in clause (i)) the procurement of the report by that person.

         Counts Three and Four allege violations of §§ 1681b (b) (3) (A) (i) and (ii), respectively. Those sections require that:

In using a consumer report for employment purposes, before taking any adverse action based in whole or in part on the report, the person intending to take such adverse action shall provide to the consumer to whom the report relates: (i) a copy of the report; and (ii) a description in writing of the rights of the consumer under this subchapter, as presented by the Bureau under Section 1681g(c)(3) of this title.

         On June 13, 2014, the Court entered the initial Agreed Scheduling Order. (ECF No. 26) . That Order delineated two "phases'' of discovery. "Phase I discovery, " which commenced immediately following the parties' initial Rule 26 conference, directed that the parties conduct discovery concerning "(1) the merits of the Plaintiff's claims that the Fair Credit Reporting Act (*FCRA') was violated with respect to him; and (2) evidence necessary for the Parties to litigate class certification." Id. "Phase II discovery, " which would proceed only to the extent necessary pending the Court's resolution of class certification issues and any prior dispositive motions, would include "whether the FCRA was violated with respect to unnamed class members and factual issues bearing on whether the alleged violations of the FCRA were willful. These issues include resources and efforts devoted to FCRA compliance, audits undertaken to confirm compliance, class-wide factual discovery, and class member identities." Id.

         In June 2015, the parties came before the Court to resolve Defendants' many objections to Thomas' discovery requests. At that hearing, the Court ordered Defendants to produce, by June 12, 2015, all documents concerning:

(1) any FCRA policies that in place at either Defendant at any time during the class period;
(2) any FCRA summary of rights forms used by either Defendant at any time during the applicable time period;
(3) any pre- or post-adverse action notice letters used by either Defendant during the applicable time period;
(4) any contracts between either Defendant and any consumer reporting agency from which either Defendant obtained consumer reports for employment purposes at any time during the applicable period;
(5) any communications, memoranda, policies, or training materials governing either Defendant's use of background reports for employment purposes during the applicable time period;
(6) any documents on which Defendants relied to demonstrate that their FCRA violations, if any, were negligent or otherwise not willful;
(7) all documents supporting the claim that Thomas' class action should fail because of a lack of numerosity, a lack of predominance of questions of law and fact, a lack of typicality, a lack of adequacy, or a lack of superiority as those terms are understood in class action practice; and
(8) all documents supporting Defendants' claim that the claims stated by Thomas are individual in nature and improper for treatment as a class action.

(Transcript of June 4, 2015 Hearing ("Hrg. Tr.", ECF No. 79)). The Court found Defendants' objections to be largely baseless. The Court also cautioned Defendants against discovery gamesmanship and repeatedly warned them that they would be bound by what they produced in response to those discovery requests. Id. at 13-14, 16-17, 22-23.

         On January 7, 2016, the Court granted in part and denied in part Thomas' motion to certify two classes. (Order, ECF No.105) . The Court first certified a so-called "Impermissible Use Class, " defined as follows:

All natural persons residing in the United States (including all territories and other political subdivisions of the United States), who applied for an employment position with Defendants or any of their subsidiaries within the two years immediately preceding the filing of the Complaint in this matter on December 11, 2013, and as part of this application process were the subject of a consumer report obtained by Defendants, (a) where the defendants failed to provide a written disclosure as stated at 15 U.S.C. § 1681b(b)(2)(A)(i) to the applicant that they intended to obtain a consumer report for employment purposes, (b) and where as a result the Defendants failed to obtain a proper written authorization as stated at 15 U.S.C. § 1681b(b) (2) (A) (ii) signed by the applicant prior to obtaining the consumer report.

         The Court also certified an "Adverse Action Sub-Class, " defined as follows:

All natural persons residing in the United States (including all territories and other political subdivisions of the United States), who applied for an employment position with Defendants or any of their subsidiaries within the two years immediately preceding the filing of the Complaint in this matter on December 11, 2013, and as part of this application process were the subject of a consumer report obtained by Defendants, (a) where the defendants failed to provide a written disclosure as stated at 15 U.S.C. § 1681b(b)(2)(A)(i) to the applicant that they intended to obtain a consumer report for employment purposes, (b) and where as a result the Defendants failed to obtain a proper written authorization as stated at 15 U.S.C. § 1681b (b) (2) (A) (ii) signed by the applicant prior to obtaining the consumer report, and (c) whom Defendants found ineligible for the position for which the applicant had applied based on the applicant's consumer report; (d) to whom Defendants did not provide a copy of the consumer report as stated at 15 U.S.C. § 1681b (b) (3) (A) (i) at least five business days before the date the adverse employment decision is first noted in Defendants' records, (d) and to whom Defendants did not provide a written summary of Fair Credit Reporting Act rights as stated at 15 U.S.C. § 1681b(b) (3) (A) (ii) at least five business days before the date the adverse employment decision is first noted in Defendant's records.

         After the certification decision, the parties commenced limited Phase II discovery. Again, Defendants resisted discovery, thereby necessitating repeated judicial intervention. See ECF No. 124 (Transcript of February 22, 2016 Hearing, overruling Defendants' objections to class notice plan); ECF No. 122 (Order overruling Defendants' objections to class notice plan); ECF No. 138 (Transcript of March 23, 2016 Hearing, addressing various disputes concerning class list, proposed protective order, and class member depositions); ECF No. 146 (Transcript of April 26, 2016 Hearing, confirming that disputes as to class list and class member depositions had been resolved). Throughout Phase II, Defendants provided discovery responses that were late, piecemeal, or in a format that was difficult or impossible for class counsel to review. See Id. Phase II discovery closed on May 13, 2016.

         On May 16, 2016, Defendants filed a second motion for summary judgment and a motion to decertify the classes (ECF Nos.154, 156). On that same date, Thomas filed a motion for partial summary judgment (ECF No. 164) seeking summary judgment "on al [sic] questions other than damages." Id.

         In support of their two motions and in opposition to Thomas' motion for partial summary judgment, Defendants raised several heretofore unmentioned defenses to the claims of Thomas and the class. First, Defendants contended that CSS Incorporated ("CSS"), a background check vendor engaged by Defendants, sent out pre-adverse action notices to some subclass members, in compliance with § 1681b(b)(3). Second, Defendants asserted that several class members had signed severance agreements or settlement agreements releasing all employment-related claims against Defendants. Third, Defendants argued that several class members had signed forum selection agreements in conjunction with their employment with UniTek subsidiaries that required all claims against Defendants to be pursued in Pennsylvania, and therefore that venue is improper in the Eastern District of Virginia as to those class members. Finally, Defendants contended that Thomas is an inadequate class representative and should be judicially estopped from pursuing the claims at issue because he had failed to disclose the claims made in this litigation as assets in his Chapter 13 bankruptcy proceedings, which he was statutorily required to do. (Memorandum of Law in Support of Defendants' Motion for Decertification (ECF No. 155); Memorandum of Law in Support of Defendants' Motion for Summary Judgment (ECF No. 157); Memorandum of Law in Opposition to Plaintiff's Motion for Partial Summary Judgment (ECF No. 166)). Accordingly, Defendants contend that they are entitled to summary judgment against the affected class members and that this action is no longer amenable to class treatment.

         In support of those arguments, Defendants offer the declaration of Lauren Dudley ("Dudley"), Defendants' Senior Director of Human Resources (ECF No. 159) and numerous attached exhibits relating to the newly raised defenses. Dudley's declaration states that she is UniTek's Senior Director of Human Resources, and that, therefore, she has personal knowledge of all of the exhibits appended thereto. (ECF No. 159-1) . Those exhibits are: (1) a "Statement of Work" that purports to supplement a previously produced contract between CSS and Defendants, and adverse action notices that CSS purportedly sent to subclass members before Defendants took adverse employment action against those subclass members (the "CSS documents") / (2) a "sample" selection of severance and settlement agreements, signed by some class members, that purport to release all of the signatories' claims against Defendants (the "Release and Accord and Satisfaction Documents"); (3) a "sample" selection of forum selection agreements, allegedly signed by 350 class members, that require all disputes against Defendants to be resolved in Pennsylvania (the "Venue Documents'7); and (4) lists of class members whose claims Defendants contend are affected by all of the foregoing documents. (ECF Nos. 159-1-159-8). Defendants offer the CSS documents and the Release and Accord and Satisfaction Documents in support of both their decertification motion and their renewed motion for summary judgment. Defendants offer the Venue Documents only in support of their decertification motion.

         On May 19, 2016, after the close of Phase II discovery and after the filing of their motions for decertification and for summary judgment, Defendants served Thomas' counsel with amended disclosures under Fed.R.Civ.P. 26(a), in which Defendants for the first time disclosed Dudley as a witness with knowledge bearing on Defendants' claims. (ECF No. 174-10) . On that same day, Defendants also produced a flash drive containing documents relating to Defendants' recently filed motions. However, the flash drive was encrypted and unreadable by Thomas' counsel's computers.

         On May 26, 2016, Thomas filed this objection and motion to strike. First, Thomas argues that Defendants' belated disclosure of Dudley and the exhibits to her declaration violated both Fed.R.Civ.P. 26 and the Court's previous Orders. (Memorandum in Support of Plaintiff's Objection and Motion to Strike ("PI. Mem., " ECF No. 174) at 13-14). Therefore, Thomas seeks to strike Dudley's declaration and all the exhibits thereto (thereby foreclosing their use in support of the pending motions), to preclude Dudley from testifying at trial, and to foreclose use of the Dudley exhibits at trial.[1]Id. Second, Thomas contends that Defendants have waived the affirmative defenses of release, accord and satisfaction, improper venue, and judicial estoppel, and therefore should be precluded from asserting those defenses in the currently pending motions or at trial. Id. at 16-18.

         At oral argument, Defendants represented that they no longer will rely on the affirmative defenses of release or accord and satisfaction in support of either their decertification motion or summary judgment motion. Accordingly, Thomas' motion will be denied as moot as to those defenses, and they are not addressed further herein. Each of the remaining issues is addressed in turn.

         DISCUSSION

         A. The Motion to Strike Dudley's Declaration and Exhibits Thereto

         The process of determining whether to impose sanctions such as those requested by Thomas involves three steps:

(1) determining that a violation of a discovery order or one of the Federal Rules of Civil Procedure occurred; (2) determining whether that violation was harmless and substantially justified, by reference to Southern States Rack & Fixture, Inc, v. Sherwin-Williams Co., 318 F.3d 592, 597 (4th Cir. 2003); and (3) fitting a sanction to the violation, if one is found.

Samsung Elecs. Co., Ltd. v. Nvidia Corp., 314 F.R.D. 190, 195-96 (E.D. Va. 2016). For the reasons set forth below, the belated production of Dudley's declaration and the attached exhibits violated both the rules of discovery and the Court's previous Orders; the untimely production was neither harmless nor justified; and striking the evidence and precluding Dudley's testimony at trial are the only appropriate sanctions.

         a. The Existence of Violations

         Fed. R. Civ. P. 26 (a) (1) (A) (i) requires that a party provide to its opponent, without awaiting a discovery request, the name of each individual likely to have discoverable information that the disclosing party may use to support its claims or defenses, unless the use would be solely for impeachment. Fed.R.Civ.P. 26 (a) (1) (A) (i) . Also, a party must provide a copy or description of "all documents, electronically stored information, and tangible things that the disclosing party has in its possession, custody, or control and may use to support its claims or defenses, unless the use would be solely for impeachment [.]" Fed.R.Civ.P. 26 (a) (1) (A) (ii) . These initial disclosures must be made within fourteen days of the parties' first discovery planning conference. Fed.R.Civ.P. 26(a)(1)(C). In addition, Rule 26(e)(1)(A) requires that a party must supplement or correct these initial disclosures in a timely manner, if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing. Fed.R.Civ.P. 26(e) (1) (A).

         These rules obligated Defendants to disclose Dudley either within fourteen days of the parties' initial planning conference or "in a timely manner." Here, Defendants supplemented their Rule 26 disclosures to add Dudley a full week after the second phase of discovery had closed and three days after they had filed her declaration in support of their motions for summary judgment and for decertification. Although Thomas was made aware of Dudley's existence by the filing of her declaration in support of Defendants' motions, Defendants' failure to give Thomas prior notice of Dudley's key role in Defendants' case utterly fails to satisfy Rule 26.[2]

         Defendants contend that Dudley's disclosure was timely because she was promoted to her current position as Defendants' Senior Director of Human Resources in April 2016, and was disclosed on May 19, 2016. (Memorandum of Law in Opposition to Plaintiff's Motion to Strike PDef. Mem. in Opp., " ECF No. 181) at 7-8). And, Defendants add, they had disclosed Dudley's predecessor, Carole Slover ("Slover") in their initial Rule 26 disclosures, and Thomas chose not to depose her. Id. The latter point is simply irrelevant to Defendants' duty to timely disclose Dudley. And, as to the first, Defendants had ample opportunity between Dudley's promotion in April and the filing of their summary judgment and decertification motions on May 16, 2016, to give Thomas notice of Dudley's existence and knowledge. Instead, Defendants chose to wait to amend their Rule 26 disclosures until after Dudley's declaration had been filed and after discovery had ended. In so doing, Defendants demonstrated that, even after numerous warnings from the Court over the past year, they have not yet renounced the gamesmanship in which they have engaged throughout discovery.

         The disclosure of the exhibits appended to Dudley's declaration was also untimely. In the initial Scheduling Order, dated June 13, 2014, the Court explicitly provided that Phase I discovery would include "evidence necessary for the Parties to litigate class certification." (ECF No. 26). And, at the hearing on June 5, 2015, the Court again ordered Defendants to produce all documents relating to class certification, specifically:

(1) any FCRA policies that in place at either Defendant at any time during the class period, see ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.