Proofpoint, Inc. v. Vade Secure, Incorporated

Background

Proofpoint and the other plaintiffs sought attorneys’ fees and costs after Vade Secure, Inc. and Vade SASU failed for months to produce source code covered by discovery orders. The plaintiffs had asked to inspect source code for Vade’s O365 and MTA products. Vade initially argued that French law barred production in the United States and that the plaintiffs should seek the material through procedures involving France. The court rejected that argument and ordered production.

Vade later raised additional objections, including relevance objections, after the motion to compel had already been decided. The court previously ruled that objections not presented in opposition to the motion to compel had been abandoned or waived. After Vade continued withholding portions of the source code, the court imposed coercive sanctions, including a daily fine and the potential for contempt proceedings and an adverse-inference instruction. Vade then appeared to comply by making the source code available for inspection by the plaintiffs’ expert.

The plaintiffs limited their request to fees and costs connected with their enforcement and sanctions efforts, including motions, hearings, negotiations, investigation of Vade’s incomplete production, and briefing. They requested $106,428.60.

Arguments and analysis

Vade argued that its piecemeal objections were reasonable and had not been made in bad faith. The court rejected that position, finding no reasonable disagreement that Vade had abandoned objections it failed to present when opposing the motion to compel. The court also explained that once a party seeking discovery shows that the information falls within permissible discovery, the opposing party must explain why the discovery is irrelevant, overly broad, or unduly burdensome.

Vade challenged the plaintiffs’ lawyers’ hourly rates and the number of hours claimed. The court found the lawyers’ rates reasonable for the work involved and consistent with prevailing rates in the district for attorneys with comparable skill, experience, and reputation. The court also found that the plaintiffs’ work was generally compensable, although the request reflected a modest degree of overstaffing and more time than the minimum reasonably necessary.

Using a 10% reduction, the court calculated a reasonable fee award of $95,785.74. The court then considered whether Vade, its lawyers, or both should pay. Under the discovery-sanctions rules discussed in the opinion, the court could assign responsibility to the party that disobeyed the order, the attorney advising that party, or both.

Disposition

The court granted the plaintiffs’ motion for attorneys’ fees in the amount of $95,785.74. Vade and its counsel at Baker & McKenzie were held jointly and severally liable, meaning each was responsible for the full payment, due no later than 14 days after entry of the order.