United States District Court, D. Vermont
Norman H. Schulman, M.D., Susan Schulman, Plaintiffs,
Saloon Beverage, Inc. d/b/a Sirloin Saloon, DWH I, LLC, Susan Schulze-Claasen, Defendants.
ORDER (Doc. 55)
JOHN M. CONROY, Magistrate Judge.
Plaintiffs Norman H. Schulman, M.D. and Susan Schulman (the Schulmans) have filed this action against the above-captioned Defendants under Vermont's Dram Shop Act (DSA), 7 V.S.A. § 501, and Vermont common-law theories, alleging that Defendants' sale of beer to Mark R. Clarke (Clarke) caused the February 18, 2011 head-on collision between the vehicle that Clarke was operating and the Schulmans' vehicle. ( See Doc. 13.) Defendants deny that Clarke entered the Sirloin Saloon or consumed beers there on the night in question. ( See Doc. 14 at 4, ¶¶ 41-42, 44.) In an Opinion and Order dated January 14, 2014, the Court granted in part and denied in part Defendants' Motion for Judgment on the Pleadings (Doc. 15), concluding that the Schulmans' common-law claims were preempted by the DSA, but that the DSA claim itself was not time-barred. (Doc. 52.)
Currently pending is the Schulmans' Rule 37 Motion for Sanctions (Doc. 55). In that Motion, the Schulmans argue that the only documentary evidence to prove that Clarke was at the Sirloin Saloon on February 18, 2011 would be the records of checks that the Sirloin Saloon issued to its customers that night. The Schulmans contend that Defendants should be sanctioned for allegedly failing to preserve or permitting the destruction of those records. ( See Doc. 55-1 at 5-6.)
All parties have consented to direct assignment to the undersigned Magistrate Judge. (Docs. 2, 3, 7.) The Court held a hearing on the Schulmans' Motion on April 10, 2014. For the reasons that follow, the Schulmans' Motion for Sanctions is DENIED.
Factual Background and Procedural History
Many of the essential allegations of the Schulmans' Amended Complaint appear in the Court's January 14, 2014 Opinion and Order. ( See Doc. 52 at 2-3.) Briefly, the Schulmans allege that, after drinking heavily during the day of February 18, 2011, Clarke stopped at the Sirloin Saloon in Manchester, Vermont while on his way to Connecticut. According to the Amended Complaint, Clarke sat at the bar alone, where he was attended to by a male bartender, and where he ate and drank three or four more beers. (Doc. 13 at 7, ¶ 41.) Clarke then allegedly left the Sirloin Saloon and resumed driving southbound on U.S. Route 7. Between 9 and 10 p.m., after traveling for less than ten miles, he fell asleep behind the wheel and collided with the Schulmans' vehicle. ( Id. at 5, ¶ 28; see also id. at 7, ¶ 43.)
The Amended Complaint further alleges that, after the collision, Clarke fled the scene and ran towards the woods, but was apprehended by a responding police officer. Clarke was screened for DUI at the scene and his breath sample was.215%. He failed a field sobriety test at the scene and was placed under arrest. Clarke admitted to the police that he had recently consumed "3 to 4 Sierra Nevada draft beers at the Sirloin Saloon in Manchester VT." ( Id. at 6, ¶ 33.)
The following additional facts are relevant to the Schulmans' Rule 37 Motion; disputes are noted where necessary. As of February 18, 2011, Defendant DWH maintained Defendant Saloon Beverage as an insured entity under DWH's general liability and liquor liability policies. ( Id. at 5, ¶ 25; Doc. 14 at 3, ¶ 25.) On April 21, 2011, DWH and Saloon Beverage filed voluntary petitions for bankruptcy protection. (Doc. 13 at 2, ¶¶ 6, 10; Doc. 14 at 2, ¶¶ 6, 10.) In the initial bankruptcy filing, Norman Schulman and his attorney, Lawrence Rosenblatt, were identified as creditors of the Sirloin Saloon. ( See Doc. 55-14 at 14-15.) On or about December 18, 2011, the Sirloin Saloon ceased operations. ( See Doc. 55-1 at 15, ¶ 37; see also Doc. 55-7, Ex. 5, Dunne Dep. 12:1-2; Doc. 55-8, Ex. 6, Marantz Dep. 17-18.)
The police officer who apprehended Clarke was Vermont State Police Trooper Travis Hess. Hess has testified that, after the collision, Clarke told him that he had recently "consumed 3 to 4 Sierra Nevada draft beers at the Sirloin Saloon in Manchester VT." (Doc. 55-13 at 3.) According to Hess, the detail that the beers were "draft" beers must have come from Clarke at a time when the two spoke at Hess's office. (Doc. 61-1 at 2.) Hess has also testified that, at the barracks, VDLC inspector Jason Elmer interviewed Clarke. (Doc. 63-1, Ex. 15, Hess Dep. 22:5-9.) Hess further testified that he recalls Elmer saying that he obtained a receipt showing what Clarke purchased at the Sirloin Saloon. ( Id. at 23:9-17.)
It is undisputed that, on the same night as the collision, Elmer arrived at the Sirloin Saloon and met with the restaurant's general manager, Seth Dunne. ( See Doc. 55-7, Ex. 5, Dunne Dep. 12-13.) The parties dispute the key details of Elmer's meeting with Dunne. Defendants have presented Dunne's side of the story. Dunne says that he showed Elmer receipts of all transactions for the evening of February 18, 2011, cash and credit, as well as a list of the employees' names, certifications, and contact information. (Doc. 61-3, Ex. C, Dunne Aff. ¶ 7.) According to Dunne, after reviewing the records of the transactions, he and Elmer "determined that no person meeting Mark Clarke's description had been at the bar that evening and no one had ordered Sierra Nevada draft beers at any time that evening." ( Id. at ¶ 8.) Also according to Dunne, the Sirloin Saloon served Sierra Nevada beers in bottles, but did not serve it on draft. ( Id. ) Dunne states that at the conclusion of their meeting, Elmer "advised that he was satisfied that Mark Clarke had not been at the restaurant that evening." ( Id. at ¶ 10.)
The Schulmans, by contrast, maintain that Dunne's recent affidavit and deposition testimony are inconsistent with statements that they say Dunne made to Elmer shortly after the collision. In support, the Schulmans have presented an affidavit signed by Elmer, who states that "[d]uring my interview of Dunne, he acknowledged to me that Clarke had been at the Sirloin Saloon the night of the accident." (Doc. 63-3, Ex. 17, Elmer Aff. ¶ 4.) According to Elmer, "Dunne also told me that Clarke sat at the bar, ate a hamburger, and had two draft beers to drink. Based upon the information provided by Dunne, I concluded that Clarke had been at the Sirloin Saloon on the night of the accident." ( Id. )
It is undisputed that Dunne later met with an insurance adjuster regarding the events of February 18, 2011. According to Defendants, Dunne supplied the adjuster, John Eule, with all of the restaurant's documents relating to February 18, 2011-including the credit card report and check view details for every transaction, including those paid in cash. ( See Doc. 61 at 4-5, ¶ 14; see also Doc. 55-7, Ex. 5, Dunne Dep. 16:7-21; Doc. 61-3, Ex. C, Dunne Aff. ¶ 11; Doc. 61-5, Ex. E, Eule Aff. ¶ 4.) Defendants assert that Eule then sent the documents to David Afton, a claims examiner for Defendants' insurer, First Mercury Insurance Company (First Mercury). ( See Doc. 61 at 5, ¶ 15; see also Doc. 61-5, Ex. E, Eule Aff. ¶ 5.)
The Schulmans filed their Complaint in this case on July 3, 2013. (Doc. 1.) On December 2, 2013, Defendants served responses to the Schulmans' First Set of Interrogatories and Requests to Produce. (Doc. 34; see also Doc. 55-6.) In response to the Schulmans' request to produce "all financial documents related to [DWH] and [Saloon Beverage] for the period February 1, 2011 through March 1, 2011, " Defendants supplied "Check View Detail Reports dated February 18, 2011, as well as the... Credit Card Detail Report dated February 18, 2011." (Doc. 55-6 at 3.) According to counsel for Defendants, her office had obtained those documents from First Mercury, which had obtained them from Eule, who-as described above-had in turn obtained them from Dunne. (Doc. 61-7, Ex. G, Cory Aff. ¶¶ 4-5.)
The Schulmans raised concerns about the completeness of the records produced. ( Id. at ¶ 6.) Counsel for the Schulmans wrote counsel for Defendants on December 17, 2013 and requested "[a] complete copy of all documents provided by Seth Dunne to the insurance carrier." (Doc. 55-9 at 2.) After receiving follow-up requests (Docs. 55-10; 55-11), counsel for Defendants replied on January 29, 2014 stating: "Defendants have produced all documentation requested and available concerning reports of February 18, 2011 and reports of Seth Dunne to the insurance carrier. Because of the ...