Free Motion for Extension of Time to Complete Discovery - District Court of Federal Claims - federal

Case 1:05-cv-00776-MMS

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS AG-INNOVATIONS, LARRY FAILLACE, LINDA FAILLACE and HOUGHTON FREEMAN Plaintiff, v. THE UNITED STATES, Defendant. ) ) ) ) ) ) ) ) ) ) )

No. 05-776 (Judge Sweeney)

DEFENDANT'S MOTION FOR AN ENLARGEMENT OF TIME FOR DEFENDANT TO COMPLETE DISCOVERY Pursuant to Rule 6(b) and 6.1 of the Rules of the United States Court of Federal Claims ("RCFC"), defendant requests an enlargement of time of 90 days, to and including December 13, 2007, within which to complete discovery. The close of discovery This is our first Plaintiff's

currently is scheduled for September 14, 2007.

request for an enlargement of time for this purpose.

counsel has been contacted and has indicated that plaintiffs will not consent to this request for an enlargement of time. Defendant's need for additional time to complete discovery is primarily the result of plaintiffs' failure to produce, until recently, documents requested by defendant in its request for the production of documents served more than one year ago. In

addition, plaintiffs have proposed adding three additional plaintiffs to their complaint; thus, additional time will be required in order to take any necessary discovery from the newlyadded plaintiffs. Finally, there are pending discovery requests

by defendant that remain to be resolved.

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I.

Plaintiffs' Delayed Document Production Defendant served its first request for the production of

documents upon plaintiffs on July 28, 2006. to that request on September 22, 2006.

Plaintiffs responded

Defendant learned only

recently, however, that plaintiffs failed to produce documents that were responsive to the July 28, 2006 request. A. The Freeman Documents

The first such category of documents are financial statements and documents reflecting property interests in Skunk Hollow Farm that were not produced by plaintiff Houghton Freeman. Among defendants July 28, 2006 requests for production was Request No. 20, which sought "[a]ll financial statements (either audited or unaudited) and financial reports relating to the farms owned or leased by the plaintiffs, upon which the sheep imported by the plaintiffs in 1996 were located prior to their seizure." In response, and notwithstanding their boilerplate objections, plaintiffs professed to have produced the "non-privileged, responsive documents that are within their possession, custody or control." Thus, the Government was led to believe by plaintiffs'

response that plaintiffs had produced any existing financial statements responsive to Request No. 20 as part of the document production they made on September 22, 2006. The September 2006

production did not, however, include the requested financial statements. In addition, Request No. 19 sought "All documents which represent the nature of the property interests that plaintiffs 2

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have with respect to Skunk Hollow Farm ... ."

Skunk Hollow Farm

is the subject of one of the plaintiffs' takings claims - Mr. Freeman claims that the Government's decision to place a quarantine on the property from 2002 through 2006 was a taking. Again, plaintiffs claimed to have produced the "non-privileged, responsive documents that are within their possession, custody or control." The September 2006 production did not, however,

include several deeds to Skunk Hollow Farm that clearly were responsive to defendant's July 2006 request for production. Defendant only learned of the existence of the financial statements and deeds after defendant's counsel issued a follow-up request for the documents by electronic mail on July 3, 2007. Plaintiffs failure to produce these documents was without reasonable explanation. In a letter dated July 11, 2007, and in

a telephone conversation the same day between defendant's counsel, Mr. Robert Chandler, and plaintiffs' counsel, Mr. Kevin Willen, plaintiffs' counsel claimed that the reason plaintiffs had not produced those documents was that they had not previously understood the term "financial statements" to include documents such as balance sheets, income statements and statements of cash flows. This argument is absurd on its face. The term "financial

statements" is commonly understood - at the very least - to refer to a company's balance sheet, income statement and statement of cash flows. Moreover, in order to have excluded the documents

from the production set, plaintiffs would have to have taken the affirmative view that Skunk Hollow's balance sheets, income 3

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statements and statements of cash flows are not financial statements. conclusion. Plaintiffs produced documents related to the property interests in Skunk Hollow Farm on July 11 and 12, 2007. Plaintiffs produced financial statements and tax documents for a company called "Skunk Hollow Farm, Inc." on July 18, 2007, the day that defendants began three days of depositions, including Mr. Freeman's deposition on July 19, 2007. Two days after the Plaintiffs could not reasonably have come to that

financial documents were produced, defendant learned during the deposition of Mr. Freeman's bookkeeper, Marsha Brobst, that the financials had been in the possession of Mr. Freeman's attorney, Mr. Thomas Amidon, for about a year before the production. Exhibit 1, Brobst Deposition, 58:2 - 59:4. B. The Faillace Documents

During the depositions of plaintiff Linda Faillace on March 6, 2007 and plaintiff Larry Faillace on March 7, 2007, it became evident that plaintiffs had not produced some documents that were responsive to our July 28, 2006 request for production, including barn books, business plans and the notes used to write Mrs. Faillace's book, Mad Sheep: The True Story Behind The USDA's War On A Family Farm ("Mad Sheep"), published in August 2006. We

requested the production of these documents (and other documents plaintiffs had not produced) during the depositions of Mrs. Faillace and Mr. Faillace. In the presence of Mr. Willen, each

of the Faillaces agreed to produce the requested documents. 4

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After the deposition, however, plaintiffs' counsel took the position that production of the Mad Sheep notes would be unduly burdensome and, therefore, refused to produce the documents. At

the time, plaintiffs' counsel indicated that the Mad Sheep notes comprised a little more than one box of documents. Only after

defendant indicated its intention to file a motion to compel did plaintiffs agree to produce the documents and, even then, did so over a span of nearly three months. The last set of Mad Sheep

notes were produced on August 10, 2007. C. Plaintiffs' Delayed Production Of Documents

Plaintiffs' delay in producing the above-described documents hampered defendant's ability to conduct discovery. Indeed,

information learned by defendant as a result of these documents has substantially changed the complexion of this case. It was

not until plaintiffs produced the financial documents that defendant even learned of the existence of Skunk Hollow Farm, Inc. (the "Company"). Based upon a review of those documents,

defendant learned that the Company was the entity through which Mr. Freeman conducted business at Skunk Hollow Farm; it is possible the Company, which is not a plaintiff in this lawsuit, owned the sheep that are the subject of Mr. Freeman's takings claim. Defendant also learned that the Company was involved in

business operations other than the operation of a sheep farm, including the sale of timber and the manufacture and sale of maple syrup. The Company also derived a substantial portion of In addition, defendant

its income from investment activities. 5

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learned as a result of the production of the deeds for Skunk Hollow Farm that the farm was transferred in 2003, during the pendency of the quarantine Mr. Freeman claims was a taking, to an organization called "Freeman Family LLC" (the "LLC"), which also is not a plaintiff in this action. Defendant is entitled to further discovery in order to fully understand the Company's various lines of business, profitability and other information related to the extent of the economic impact to Mr. Freeman and the nature of Mr. Freeman's investment backed expectation, if any, in the Company. Moreover, defendant

needs additional discovery in order to determine the nature of the Company's property interest in the sheep and real property that are the subject of plaintiffs' takings claim. Defendant

also requires additional discovery in order to understand the circumstances surrounding the transfer of the farm in 2003 and any other information that might affect the nature of the property interests in Skunk Hollow Farm. Finally, the Faillace documents contain business plans and thousands of pages of factual notes that are germane to the issues in this case and were not available to defendant at the time of the depositions of Linda and Larry Faillace. Defendants

are therefore considering reopening the depositions Mrs. Faillace or Mr. Faillace regarding the newly-produced documents. Thus, the production of the Faillace and Freeman documents, many of which were produced a year or more after they were requested, gives rise to the need for additional time for the 6

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Government to analyze these documents.

Moreover, the fact that

defendant did not have relevant documents available during the depositions of Linda and Larry Faillace. In addition, the fact

that defendant learned only recently of the existence of the Company and the LLC, two entities with potential property interests in the property that is the subject of Mr. Freeman's takings claims, necessitates further discovery in order to determine the true nature of those interests and its impact on the takings analysis. II. Additional Plaintiffs Plaintiffs have proposed to add the Company, the LLC and Mr. Freeman's wife, Doreen Freeman, as plaintiffs in this action, but, to date, they have not done so. If and when the plaintiffs

move to add these parties, and if the Court permits plaintiffs to do so, the Government should be permitted the opportunity to take additional discovery from them. Moreover, the uncertainty surrounding the identity of the parties in this case created by plaintiffs has led to additional discovery delays. Plaintiffs first indicated their intention in

an e-mail dated to add the new parties on August 15, 2007 and requested defendant's consent to their motion for leave to amend the complaint. Defendant's counsel informed plaintiffs' counsel

on August 26, 2007 that he wished to review a copy of the motion for leave to amend the complaint before the Government would consent to the filing of the motion. Defendant has not received

any communication from plaintiffs on the issue since that date. 7

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During that time, as a matter of economy, defendant has not undertaken additional discovery relating to the Company, the LLC or Doreen Freeman until plaintiffs make a decision regarding whether to add them to this lawsuit as plaintiffs. III. Pending Discovery After learning of the existence of the Company and the LLC, the Government served additional discovery requests on the plaintiffs on August 10, 2007, including a request for the production of documents and a notice of deposition of the Company pursuant to RCFC 30(b)(6). pending. With respect to the request to production of documents, plaintiffs served their objections and responses on September 10, 2007. The Government has not yet determined its response to These discovery requests are still

plaintiffs' objections, but, in any event, additional time is necessary in order to for the parties to attempt to resolve these issues without the necessity of Court action. Similarly, there are issues that remain to be resolved with respect to the deposition of the Company. Defendant served a

notice of deposition on plaintiffs' counsel on August 10, 2007. On August 15, 2007, counsel for plaintiffs and defendant exchanged emails about the scheduling of the potential deposition and other discovery in this case. Defendant's counsel indicated

to plaintiffs' counsel that it appeared unlikely the deposition could be scheduled before the September 14, 2007 close of discovery and that an extension of the deadline might be 8

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necessary.

Defendant's counsel initially waited to serve a

subpoena upon the Company until a date for the deposition could be agreed upon between the parties in order to avoid the cost and effort of having to serve a second subpoena after the parties reached an agreement on the deposition date. Also on August 15,

2007, plaintiffs' counsel informed defendant's counsel of plaintiffs' intent to add Skunk Hollow Farm, Inc. as a plaintiff to this action. From that point forward, defendant's counsel did

not serve a subpoena upon the Company for the additional reason that plaintiffs had expressed an intent to add Skunk Hollow Farm as a plaintiff and, if that were to occur, a subpoena would not be required. To date, plaintiffs have not moved to add Skunk

Hollow Farm as a plaintiff.1/ On September 7, 2007, plaintiffs' counsel informed defendant's counsel by letter that plaintiff would not produce a designee of the Company for deposition because the Company had not been served a subpoena. Plaintiffs did not state any other On September

proper objection to the taking of a deposition.2/
1

On August 26, 2007, defendant's counsel requested that plaintiffs' counsel send a draft of plaintiffs' motion for leave to amend their complaint so that defendant might review it before making a decision as to whether to give its consent to the motion. Plaintiffs have not responded to this communication and have not otherwise communicated to defendant whether they intend to proceed with their motion for leave to amend. Plaintiffs did add that, even if the Company were subject to this Court's authority, plaintiffs would not tender a witness until the Court decides defendant's motion for protective order and plaintiffs' motion to compel, currently pending before the Court. Plaintiff indicated that if the Court permits the Government to designate deposition testimony in lieu of producing witness, then Plaintiffs intend to do the same. Plaintiffs' (continued...) 9
2

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13, 2007, the Government attempted to serve a subpoena upon the Company for a deposition to take place on October 12, 2007.3/ remains up to plaintiff, therefore, to produce a witness or to state a proper objection pursuant to the RCFC. Thus additional time for the Government to take discovery is necessary. Defendant will need at least 60 days from the date of It

deposition of the Company in order to allow adequate time for follow-up discovery based upon information acquired at the deposition, and therefore requests an enlargement of 90 days. Conclusion For the foregoing reasons, defendant respectfully requests an enlargement of time for defendant to take discovery of 90 days. Respectfully submitted, PETER D. KEISLER Assistant Attorney General

(...continued) "tit-for-tat" argument is not a proper objection to the taking of a deposition. If plaintiffs wish to object to the taking of the deposition pursuant to the subpoena issued to the Company on September 13, 2007, it remains up to them to articulate a valid basis pursuant to the RCFC for doing so. As of the time of filing of this motion, defendant has requested that plaintiffs' counsel, Mr. Jonathan Abram, accept service of the subpoena on behalf of Skunk Hollow Farm, Inc. Mr. Abram informed defendant's counsel that he viewed the request to be a reasonable one, but wanted to confer with Mr. Freeman, or his attorney Mr. Amidon, before agreeing to accept service on behalf of the Company. In any event, the Government anticipates service of the subpoena prior to the scheduled close of discovery. 10
3

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s/ Jeanne E. Davidson JEANNE E. DAVIDSON Director s/ Sheryl L. Floyd SHERYL L. FLOYD Senior Trial Counsel ROBERT E. CHANDLER Trial Attorney Commercial Litigation Branch Civil Division Department of Justice 1100 L St., N.W. Attn: Classification Unit 8th Floor Washington, D.C. 20530 Tel: (202) 307-1011 Attorneys for Defendant September 13, 2007

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CERTIFICATE OF FILING

I hereby certify that on this 22nd day of August, 2006, a copy of the foregoing "DEFENDANT'S MOTION FOR AN ENLARGEMENT OF TIME TO COMPLETE DISCOVERY" was filed electronically. I

understand that notice of this filing will be sent to all parties by operation of the Court's electronic filing system. may access this filing through the Court's system. Parties

s/ Sheryl L. Floyd