Optrics Inc v. Barracuda Networks Inc

Background

Optrics Inc. sued Barracuda Networks Inc. in 2017. Barracuda later asserted counterclaims involving ownership of a trademark and domain name and alleged breach of the parties’ 2013 Reseller Agreement. Optrics dismissed its claims with prejudice in February 2020, and the parties later settled their underlying dispute. The settlement did not moot Barracuda’s request for monetary sanctions based on Optrics’ discovery conduct.

Discovery Violations

The court found that Optrics repeatedly failed to meet discovery deadlines and violated several discovery orders. Among other things, Optrics did not timely produce responsive documents or a privilege log, did not provide required declarations about missing documents, and did not comply with orders requiring it to provide information about its document searches. The court had granted multiple deadline extensions and warned Optrics that further delay could result in sanctions.

The court also found problems with Optrics’ preservation and collection of electronic information. Optrics did not issue a litigation hold, had a 30-day retention period for certain backups, initially used its own personnel to search for responsive information, and failed to adequately prepare witnesses for depositions about its electronic-data practices. The court concluded that these failures impaired the value of the depositions, potentially resulted in lost relevant documents, and forced Barracuda to incur additional work and expense.

Arguments About Responsibility

Optrics argued that its former counsel, Herbert L. Terreri and Grace R. Neibaron, were responsible for the discovery failures and that Optrics had followed their advice without understanding the consequences. Terreri gave a different account, stating that Optrics had insisted on collecting some information itself, that the risks and possible sanctions had been discussed, and that Optrics had not authorized necessary electronic-discovery work.

The court said it could not determine who was truthful on every disputed point, but found that both Optrics and its former counsel failed in their responsibilities. It concluded that Optrics remained responsible for its own preservation and collection failures and that counsel had an independent duty to supervise discovery and make reasonable inquiries into the adequacy of discovery responses.

Sanctions and Amount

The court held that sanctions were warranted under Federal Rule of Civil Procedure 37 and the court’s inherent authority to control its proceedings. Barracuda had requested terminating or preclusionary sanctions, but the court found those remedies meaningless after the parties settled. The court instead awarded monetary sanctions.

Barracuda initially claimed $449,659.24 in fees and costs. The court awarded some categories in full, reduced others by half, and denied fees that were not sufficiently caused by Optrics’ misconduct or arose from good-faith disputes. The court awarded $202,035.00 total.

Disposition

The court granted Barracuda’s Motion for Sanctions. It ordered $202,035.00 in monetary sanctions in favor of Barracuda and against Optrics, Terreri, and Neibaron jointly and severally, to compensate Barracuda for fees and costs caused by Optrics’ prolonged discovery misconduct and repeated violations of court orders.