Ferranti v. Electrical Resources Co.

          Livingston Circuit Court LC No. 16-029044-CD

          Before: Borrello, P.J., and K. F. Kelly and Servitto, JJ.

          Per Curiam.

         Appellants, plaintiff Thomas A. Ferranti and his counsel, Francyne B. Stacey, appeal by leave granted the trial court order denying discovery following a show cause notice of criminal contempt, arising from a purported violation of a discovery order.^[1] We reverse.

         I. BASIC FACTS

         Ferranti was a sales representative for defendant, Electrical Resources Company (Company). He left the Company in 2015, and brought a lawsuit alleging age discrimination and failure to pay sales commissions against the Company and one of its employees, defendant Terry L. Grieve. During discovery, appellants sought to examine the Company's sales records. The parties stipulated to a discovery order that required the Company to provide Ferranti's expert with access to the sales records, which were stored in a cloud-based server called Epicor. The order provided, in relevant part, as follows:

Plaintiff's forensic expert, Fortz Legal, shall be provided access to and the opportunity to copy all sales information contained in Defendant Electric Resources Company's ("ERC") electronic sales records from October 2014 up to and including the present. Plaintiff's expert may specifically access any customer or sales tracking or cloud software or services utilized by ERC during the stated time period.

         Ferranti's expert encountered problems accessing the electronic sales records. After an exchange of e-mails across numerous dates, Stacey, Ferranti's counsel, then requested that the Company's counsel send a username and password to access the records via the internet. The Company's counsel sent the username and password to Stacey.^[2]

         Stacey gave the username and password to Ferranti, and he accessed the records, downloaded certain records, and sent the downloaded records to Stacey electronically. An Epicor specialist later determined that a user who logged in with the provided username and password during the same timeframe had modified or removed metadata from the electronic records. Ferranti acknowledged that he had accessed the records, but denied intentionally modifying or removing any data.

         The Company filed a motion to dismiss the civil suit as a sanction for violation of the stipulated discovery order. In the same motion, the Company sought to hold appellants in criminal contempt for violation of the stipulated order. The trial court held a hearing on the contempt motion and, after confirming that the Company wished to proceed with criminal contempt, the court advised appellants of the contempt allegations. Appellants stood mute to the charges, and the court entered not guilty pleas on their behalf. The court appointed defense counsel to act as the prosecutor in the criminal contempt proceeding. Appellants retained separate counsel, and a motion for discovery was filed on their behalf. The discovery motion included a request for documents in accordance with MCR 6.201(B)(1) as well as the opportunity for an independent forensic examination of relevant stored documents and files among other items. Defendants opposed the motion, asserting that appellants were seeking discovery and information pertinent to restitution that presented an inquiry separate and distinct from the criminal contempt. The trial court denied the motion for discovery. We granted appellants' application for leave to appeal.

         II. CRIMINAL CONTEMPT SHOW CAUSE AFFIDAVIT

         Appellants initially contend that the information provided to the trial court was insufficient to warrant the issuance of an order to show cause for criminal contempt. We agree. A trial court's decision regarding a contempt motion is reviewed for an abuse of discretion, while its factual findings are reviewed for clear error. DeGeorge v Warheit, 276 Mich.App. 587, 591; 741 N.W.2d 384 (2007). "If the trial court's decision results in an outcome within the range of principled outcomes, it has not abused its discretion." Taylor v Currie, 277 Mich.App. 85, 99; 743 N.W.2d 571 (2007). Further, "[c]lear error exists when this Court is left with the definite and firm conviction that a mistake was made." In re Contempt of Henry, 282 Mich.App. 656, 668; 765 N.W.2d 44 (2009). Additionally, questions of law related to the trial court's decision are reviewed de novo. Id.

         A trial court has inherent and statutory authority to enforce its orders. MCL 600.611; MCL 600.1711; MCL 600.1715. "Contempt of court is defined as 'a willful act, omission, or statement that tends to . . . impede the functioning of a court.'" In re Contempt of Dudzinski, 257 Mich.App. 96, 108; 667 N.W.2d 68 (2003) (quotation marks and citation omitted). MCR 3.606(A), which specifically governs the initiation of contempt proceedings for conduct occurring outside the immediate presence of the court, states as follows:

         Initiation of Proceeding. For a contempt committed outside the immediate view and presence of the court, on a proper showing on ex parte ...