Spectrum Scientifics, LLC v. Celestron Acquisition, LLC

Background

The Direct Purchaser Plaintiffs (DPPs) sought sanctions under Federal Rule of Civil Procedure 37(b)(2) based on defendants’ failure to comply with discovery orders requiring production of transactional data. An earlier stipulated schedule required defendants to complete that production by December 1, 2021. After disputes about the production, the court’s November 9, 2022 order required defendants to produce Celestron’s relevant transactional data without filters by November 30, 2022, provide written information about their data systems and the categories of information available, and make witnesses available for a deposition concerning the data if requested.

DPPs argued that the production remained incomplete, including because it did not contain information about direct-to-consumer sales through the Celestron website. Defendants maintained that they had produced every sales transaction with Celestron’s domestic customers and characterized later productions as responses to demands for information that was unresponsive or in different formats. Defendants made additional productions on January 19 and February 22, 2023. After an April 4 hearing, the court required the parties to confer with technical and data experts. Their later report indicated that defendants planned further production and that some website-sales information still appeared incomplete.

Court’s analysis

The court concluded that defendants did not fully comply with its prior discovery orders and had been careless in their representations to the court about the available sources of transactional data and the completeness of their productions. The court found that defendants failed to identify and timely produce all responsive transactional data, including data responsive to Request for Production No. 96.

The court recognized that defendants’ data sources were complicated and that accessing some information might be difficult. It nevertheless found that defendants repeatedly postponed conferences, failed to bring a person knowledgeable about the data sources to those conferences, and did not diligently investigate complaints about missing information. The court also stated that DPPs had demanded some information beyond the scope of reasonable discovery and had taken a less-than-cooperative approach to collecting and producing electronically stored information, but that conduct did not excuse defendants’ failure to comply with the court’s orders.

Ruling

The court held that DPPs were entitled to recover reasonable attorneys’ fees and expenses connected to filing the sanctions motion and supporting materials, preparing the reply except for Mr. Groves’s reply declaration, and preparing for and participating in the April 4, 2023 hearing. It did not determine the amount because the supporting declaration did not show which fees and expenses were attributable to those activities or whether the hours claimed were reasonable. The court stated that DPPs had not established that evidentiary sanctions were warranted.

The court granted, in part, DPPs’ motion for an order awarding sanctions in the form of reasonable attorneys’ fees and expenses for the compensable matters identified in the order. The parties were invited to stipulate to the amount. Without a stipulation, DPPs had to submit a fee-and-cost application by June 21, 2023, and defendants’ response was due June 30, 2023.