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Star Envirotech, Inc. v. Redline Detection, LLC, No. SA CV 12-01861-JGB (DFMx), 2015 WL 9093561 (C.D. Cal. Dec. 16, 2015).

The defendants’ discovery misconduct, which delayed discovery by several months and required significant judicial intervention, merited an adverse inference instruction and monetary penalties but not terminating sanctions.

During the course of discovery, defendant Redline Detection, LLC engaged in a course of dilatory conduct, including four key failures, that prompted plaintiff Star Envirotech to file a motion seeking case-dispositive sanctions. First, Redline failed to comply with court orders to produce customer information and sales data in response to discovery requests from Star. Second, Star asked the court to reopen depositions for four witnesses because Redline produced key documents after their depositions; the court ultimately reopened two. Third, Redline attempted to construe the court’s order to reopen the depositions narrowly, arguing that their scope was limited to the documents recently produced, so its counsel repeatedly instructed the deponents not to answer questions. Fourth, Star argued that Redline not only failed to preserve documents but also “‘actively and intentionally destroyed documents and secreted electronic and other evidence’” that showed its smoke machines were compatible with nitrogen, violating Star’s patent. Redline had destroyed some hard-copy advertisements, manuals, and DVDs but kept electronic copies of these documents, which it ultimately produced.

Noting that the duty to preserve “does not require [parties] to preserve ‘every shred of paper,’” the court determined that Redline did not engage in actionable spoliation. The court found that Star could not establish how many ads or manuals Redline destroyed; moreover, Redline produced exemplars of most of these documents. Furthermore, the court could not find that Redline acted with any “nefarious purpose” in destroying any evidence where it readily admitted that its products were compatible with nitrogen.

However, the court did rule that Redline was dilatory in performing its discovery obligations, requiring “a motion to compel, a motion for contempt, a motion for sanctions, and three orders” from the court before Redline fully responded to two interrogatories and a document request. The court noted, “By even the most conservative measure, that was one motion and one order too many.” The court also found that Redline improperly limited the scope of the reopened depositions and should have clarified any confusion about the order with the court.

Accordingly, Redline’s behavior warranted sanctions. To impose terminating sanctions in the Ninth Circuit, the court must consider “whether a party’s discovery violations make it impossible for a court to be confident that the parties will ever have access to the true facts.’” Star received ample evidence, albeit several months late, and Redline’s “‘[d]elay alone’” was “‘insufficient prejudice’” to deserve dismissal. Therefore, the court saddled Redline with an adverse inference and required it to pay Star’s attorneys’ fees and costs for the motion for sanctions and reopened depositions.

Star Envirotech, Inc. v. Redline Detection, LLC, No. SA CV 12-01861-JGB (DFMx), 2015 WL 9093561 (C.D. Cal. Dec. 16, 2015).

 

Takeaways

Redline played with fire throughout the course of the case. During discovery, the court noted its displeasure with Redline’s delay in responding to interrogatories and document requests and its failure to be forthcoming about its desire for a protective order. Had Redline asked for a protective order up front instead of delaying its production, it could likely have avoided sanctions as well as the ire of the court. Instead of frustrating the court by requiring an opposing party to file motion upon motion to compel discovery, a party that wants to narrow the scope of discovery should follow the advice the court offered Redline in June 2015: it should address issues “more proactively” and seek judicial intervention as early as possible in the case before escalating the matter into a full-blown, costly dispute.

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