Cadence Design Systems, Inc. v. Intelligent Automation Co., Ltd.

Background

Cadence served document subpoenas on Intelligent Automation Technology, Inc. (IAT) and Xuejian Wei. They moved to quash the subpoenas, but on May 27, 2025, the court denied those motions and ordered them to produce all non-privileged documents responsive to the subpoenas by June 17, 2025. IAT and Wei produced two documents on June 16 and no other documents by the deadline. They continued producing some documents as late as October 2025.

Cadence moved for certification of facts and a recommendation of civil contempt under Federal Rule of Civil Procedure 45(g) and 28 U.S.C. § 636(e). Civil contempt may be used to pressure compliance with a court order or compensate for losses caused by noncompliance. Cadence argued that IAT and Wei failed to produce responsive documents and did not conduct an adequate search. IAT and Wei argued that Cadence should have sought discovery from the defendant, Intelligent Automation (Zhuhai) Co., Ltd., and asserted that they lacked possession, custody, or control of some documents.

Civil Contempt Findings

The court found that the May 27 order was specific and definite and required IAT and Wei to produce all responsive, non-privileged documents by June 17. Cadence established by clear and convincing evidence that IAT and Wei failed to comply. The court also found that the non-parties had not shown that they took all reasonable steps to comply or explained why they could not comply. The court noted that the extent of their continuing noncompliance was unclear, but found that their opposition did not establish that they lacked possession, custody, or control of responsive documents.

The court therefore certified that IAT and Wei failed to comply with the May 27 order. It found that their conduct supported civil contempt and recommended that the presiding judge order them to appear and show cause—that is, explain why they should not be held in contempt.

Remedy Recommendation

The court concluded that further production from IAT and Wei was not necessary because the defendant had appeared, obtained an order setting aside its default, and would defend the case on the merits. The court stated that these developments did not excuse the earlier failure to comply, but they affected the appropriate remedy. It recommended relieving IAT and Wei of any further obligation to comply with Cadence’s subpoenas.

Cadence sought $19,816.20 for attorneys’ fees incurred in addressing the noncompliance, attempting to resolve the dispute, and filing the motion. IAT and Wei objected to any compensatory sanction but did not argue that the requested amount was unreasonable. The court recommended that, if the presiding judge found IAT and Wei in contempt, they be jointly and severally responsible for paying Cadence $19,816.20 in attorneys’ fees.

Disposition

The opinion states that Cadence’s motion was granted in part and denied in part. Judge Virginia K. DeMarchi certified the stated facts and found an act constituting civil contempt, but recommended that the presiding judge conduct the show-cause proceeding and decide whether to impose contempt and the recommended fee award.