REPORT AND RECOMMENDATION ON DEFENDANT'S MOTION FOR DEFAULT AND SANCTIONS
ARTHUR J. BOYLAN, Chief Magistrate Judge.
This matter came before the undersigned on October 10, 2013 on Defendant Keystone Dental, Inc.'s ("Keystone") Motion for Entry of Default and for Sanctions [Docket No. 94] against Plaintiff Dental Implants & Biomaterials S.L. ("DI&B"). No representatives of DI&B personally appeared at the hearing. Mark Schneebeck appeared on behalf of Keystone. This matter has been referred to the undersigned for the resolution of pretrial matters pursuant to 28 U.S.C. § 636(b)(1)(a) and District of Minnesota Local Rule 72.1. For the reasons set forth below, the Court recommends that default be entered against DI&B in an amount to be determined by the District Court. The Court further finds that attorney's fees should be awarded to Keystone in an amount to be determined by the District Court for DI&B's conduct in discovery.
I. FINDINGS OF FACT
This dispute involves a commercial relationship between Keystone, a manufacturer of dental implants, and DI&B, which distributed Keystone's products in Spain and Portugal from 2008 until early 2012. [Docket 13, Counterclaim ¶¶ 2, 7-14.]
Keystone claims that DI&B purchased product from Keystone pursuant to the terms of an International Distribution Agreement. [ Id. ¶ 7-14.] Under the parties' agreement, DI&B agreed to pay Keystone for product shipments within 90 days of invoice and also agreed to pay interest and collection costs (including attorney's fees) for late payments. [ Id. ¶ 17.] The parties' agreement provided two pricing schedules, one for DI&B's largest customer, Adeslas, which allowed DI&B to purchase products from Keystone at lower prices, and another which required DI&B to purchase products from Keystone for its other customers at higher prices. [ Id. ¶¶ 20-24.]
Keystone claims that DI&B owes Keystone $608, 726.68, plus interest and attorney's fees, on unpaid invoices. [ Id. ¶ 19.] Keystone further claims that DI&B has abused the Adeslas discount by buying products under that discount and selling such products to its other customers. [ Id. ¶¶ 25-28.] Keystone demanded arbitration against DI&B on March 22, 2012 to pursue these claims. [Docket 1, Complaint ¶ 49.]
In response to Keystone's arbitration demand, DI&B commenced this action on May 14, 2012 seeking declaratory and injunctive relief to restrain Keystone from pursuing arbitration. [ Id. ] On June 5, 2012, Keystone served a Counterclaim against DI&B for its failure to pay for product and for its abuse of the Adeslas discount. [Docket No. 13.] On July 3, 2012, the District Court issued an order enjoining Keystone from proceeding with arbitration. [Docket No. 29, Order at 6.]
On October 16, 2012, DI&B moved to dismiss Keystone's counterclaims based on personal jurisdiction the doctrine of forum non conveniens. [Docket No. 33.] In opposing DI&B's motion, Keystone offered to voluntarily dismiss Counts III and IV of its Counterclaim. [Docket No. 49 at 2, 4.] On January 9, 2013, the Court denied DI&B's motion to dismiss. [Docket No. 49.]
Following the denial of DI&B's motion to dismiss, Keystone and DI&B engaged in discovery regarding Counts I and II of Keystone's Counterclaim and DI&B's defenses. [ See Docket No. 65.] The parties continued discussions relating to their Rule 26(f) Conference through January 2013 and began exchanging written discovery and documents between February and April 2013, during which period both parties requested the other to produce extensive documentation regarding the parties' four-year business relationship. [ Id. ] In order to protect confidential information disclosed during the course of discovery, the parties stipulated to the entry of a Protective Order, which was entered on April 29, 2013. [Dockets 50 & 51.] Following entry of the Protective Order, Keystone produced voluminous documents responsive to DI&B's document requests, much of which constituted or contained Keystone's confidential business information. [Docket 89.]
During April and May, the parties engaged in a number of meet-and-confer sessions regarding electronic and written discovery during which Keystone raised issues with respect to DI&B's search and production of emails and failure to disclose information regarding its defenses in response to written discovery. [Docket No. 65.] During these sessions, DI&B stated that it would both make efforts to search for and produce emails so that it could supplement its productions and supplement its answers to written discovery to disclose the factual bases of its defenses. [ Id. ]
By June it was apparent to Keystone that DI&B had not complied with the Federal Rules of Civil Procedure in responding to Keystone's discovery and Keystone brought a motion to compel on June 6, 2013. [Docket No. 62.] Keystone's motion sought an order requiring DI&B to conduct a reasonable search for documents, to answer interrogatories regarding its affirmative defenses, and to withdraw objections to producing entire categories of relevant documents regarding DI&B's use of the Adeslas discount. [ Id. ] On June 26, 2013, the Court issued an order that required DI&B to meet and confer with Keystone "to create an electronic discovery protocol, including a keyword/key term list and parameters for conducting a computer database document search, " to disclose through interrogatory answers the factual bases underlying its asserted defenses, and that overruled DI&B's objections to producing documents regarding DI&B's use of the Adeslas discount. [Docket No. 72.] The Court's deadline for DI&B to provide and supplement discovery pursuant to its Order was August 1, 2013. [ Id. ]
On July 2, 2013, counsel for the parties conducted a meet-and-confer session regarding an electronic discovery protocol. [Docket No. 86.] Following the meet-andconfer session, counsel agreed to a protocol that included custodians, time frames, and search terms. [ Id. ] DI&B never raised any issues with respect to the negotiated protocol between July 2, 2013 and August 1, 2013. [ Id. ]
On August 1, 2013, DI&B's counsel filed a motion to withdraw without substitution. [Docket No. 76.] DI&B's counsel argued that it was required to withdraw without substitution based on the Minnesota Rules of Professional Conduct and sought leave to further explain its reasons for withdrawing during an in camera session with the Court. [Docket No. 79.] In support of counsel's motion to withdraw, counsel filed a declaration from DI&B's president and chief financial officer consenting to counsel's withdrawal. [Docket No. 80.] DI&B's counsel also filed a declaration from DI&B's lead counsel in Spain stating that "DI&B does not recognize the jurisdiction of this court." [Docket No. 81.] On August 7, 2013, Keystone filed a motion for sanctions based on DI&B's failure to comply with the Court's discovery order. [Docket No. 83.]
After a hearing on August 21, 2013, which included an in camera session between DI&B's counsel and the Court, the Court granted DI&B's counsel's motion to withdraw. [Docket No. 92.] As part of that Order, in light of DI&B's statement that it did not recognize the jurisdiction of the Court, the Court ordered DI&B's former counsel to contact DI&B regarding its obligations under the Protective Order. [ Id. ] The Court also imposed a September 15, 2013 deadline for DI&B to retain new counsel and required DI&B's former ...