Joint Stock Company Channel One Russia Worldwide v. Infomir LLC

Background

The plaintiffs, described in the opinion as a group of Russian television broadcasters, sued Infomir LLC and other defendants, alleging that they intercepted and rebroadcast the plaintiffs’ television programming over the internet without authorization. The sanctions dispute concerned an investigation conducted in May 2016 by Christopher Vidulich, a paralegal employed by the plaintiffs’ counsel.

Vidulich used Wireshark, a program that records and analyzes data packets transmitted over a computer network, while viewing a Channel One stream through an Infomir-brand internet-protocol-television receiver. The native file created by the investigation was a PCAP file, meaning a file containing captured network packets. Vidulich’s affidavit described the investigation and stated that he traced the stream to a particular domain and internet-protocol address associated with Infomir. The opinion states that both sides’ experts agreed that this key assertion was inaccurate and that the PCAP file showed the domain was not the source of the unauthorized video stream.

Discovery history and sanctions

The plaintiffs did not initially produce the PCAP file or other electronic stored information from the investigation. Magistrate Judge Barbara C. Moses later ordered them to produce documents and data recording information Vidulich acquired during his investigation. The plaintiffs produced files in XPS and PDF formats, but did not produce the PCAP file by the deadlines in the discovery orders. After further disputes, the plaintiffs produced the PCAP file on October 12, 2018, describing its earlier omission as inadvertent.

Infomir moved for sanctions under Federal Rule of Civil Procedure 37(b) and the court’s inherent powers. Magistrate Judge Moses found that the plaintiffs violated the discovery orders and made numerous false statements about the investigation, the electronic data, and their compliance with discovery obligations. She imposed monetary sanctions against the plaintiffs and their counsel and barred the plaintiffs from introducing or relying on Vidulich’s affidavit, any report, testimony, or opinion concerning the investigation, and any data or information captured during it. She also ordered reimbursement of Infomir’s reasonably incurred attorney fees, expert fees, and other costs related to discovering the PCAP file and pursuing the sanctions motion.

District court review

The plaintiffs argued that the sanctions order should receive more demanding review because excluding the investigation evidence effectively disposed of their direct-infringement claims. Judge Daniels rejected that argument. He held that the order was a nondispositive pretrial ruling because the plaintiffs remained able to use other evidence to argue that Infomir unlawfully streamed their programming. He therefore reviewed the magistrate judge’s ruling under the standard asking whether it was clearly erroneous or contrary to law.

Judge Daniels affirmed the sanctions order. He concluded that the discovery orders required production of the full Wireshark data, that the XPS file was not a reasonably usable substitute for the PCAP file because it did not contain all the captured information, and that the magistrate judge acted within her discretion in finding discovery violations. He also upheld the finding that the plaintiffs’ statements about the investigation and their discovery compliance amounted to bad faith, noting the opinion’s findings that the plaintiffs continued to claim full compliance despite material inconsistencies and the delayed production of the PCAP file.

Judge Daniels further held that preclusion was an appropriate sanction after considering the plaintiffs’ conduct, the effectiveness of lesser sanctions, the length of noncompliance, warnings about compliance, and prejudice to Infomir. The court overruled the plaintiffs’ objections and affirmed Magistrate Judge Moses’s opinion and order. It separately denied the plaintiffs’ request to certify the decision for an immediate appeal, finding that the request did not present an issue of first impression.