UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION. v. Case No. 5:00-CV Defendant/Counterclaimant.

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1 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION The Regents of the UNIVERSITY OF MICHIGAN, The Board of Trustees of MICHIGAN STATE UNIVERSITY, and VETGEN, L.L.C., Plaintiffs, v. Case No. 5:00-CV GENESEARCH, L.L.C. and MARY HELEN WHITELEY, Ph.D., Hon. Marianne O. Battani Defendant/Counterclaimant. PLAINTIFFS MOTION AND BRIEF IN SUPPORT FOR AN ORDER SANCTIONING DEFENDANTS FOR FAILING TO PROVIDE DISCOVERY AND FOR DISOBEDIENCE OF A COURT ORDER MOTION / When responding to the Plaintiffs First Motion for Summary Judgment of Infringement, Defendants GeneSearch and Whiteley produced for the very first time -- documents that they assert establish dates of sale for their accused vwd testing. 1 These same documents fall well within the Plaintiffs two-year old discovery requests. Likewise, the documents were the subject of a Court ORDER directing that they be turned over to the Plaintiffs several months ago. Until the Defendants attached them to their Response Brief, however, the documents had never been provided to the Plaintiffs. 1 The offending documents were attached to the Defendants Response Brief as Exhibits 6, 7, and 8. They are attached here as Exhibits 1, 2, and 3, respectively.

2 When confronted with this fact, Defendants counsel admitted that the documents had been deliberately withheld from the Plaintiffs. See Exhibit 4, second paragraph. No justification was offered. Instead, Defendants previous lawyers were blamed, insisting that the documents weren t provided based on their advice. Id. Since the Defendants (1) failed to produce the documents in response to Plaintiffs discovery requests; (2) failed to produce the documents as required under Fed. R. Civ. P. 26(e)(2); and (3) failed to produce the documents in response to a previous Court ORDER, the Defendants should be held in contempt of Court. There is, after all, no advice of counsel excuse for disobeying Court ORDERS. If a party can ignore Court ORDERS with impunity -- even if a lawyer told them to -- then a court s ability to administer justice would be severely compromised. In the context of this case -- where the Defendants abuse of the discovery process has been the norm -- this Court should exercise its inherent authority to punish the Defendants by ORDERING the relief sought in the accompanying Brief in Support. COMPLIANCE WITH RULE 7.1 Plaintiffs counsel certifies that on May 16, 2002, he sent a letter to counsel for Defendants to advise him of the nature of this Motion and its legal basis. Counsel for Defendants was unable to concur in the relief requested, thereby making this Motion necessary. 2

3 ISSUES PRESENTED ISSUE #1 Whether the Defendants should be sanctioned for failing to provide the documents attached hereto at Exhibits 1, 2, and 3 in response to Plaintiffs discovery requests served on Defendants on September 8, 2000? Plaintiffs Answer: YES ISSUE #2 Whether the Defendants should be sanctioned for failing to update their responses to Plaintiffs discovery requests as required by Fed. R. Civ. P. 26(e)(2), to include the documents attached at Exhibits 1, 2, and 3? Plaintiffs Answer: YES ISSUE #3 Whether the Defendants should be sanctioned for failing to produce the documents attached at Exhibits 1, 2, and 3 in response to this court s ORDER of November 29, 2001? Plaintiffs Answer: YES i

4 BRIEF IN SUPPORT OF MOTION I DEFENDANTS REFUSED TO PROVIDE PLAINTIFFS WITH DISCOVERY AND COMPLY WITH A COURT ORDER 1. The Defendants initial discovery responses were incomplete On September 8, 2000, nearly two years ago, Plaintiffs served a First Set Interrogatories and a First Set of Requests for Documents and Things on the Defendants. The discovery requests that are most relevant to this Motion are quoted below: Interrogatory No. 5: For the accused product, state the total sales figures including gross sales income on a monthly basis, the amount of profit attributable to these sales, and an explanation of how profit is calculated. Document Request No. 3: Produce all documents showing Defendant s sales for the accused product, documents showing the total sales figures (in U.S. dollars and units) for the accused product, the gross sales income for the accused product, and the amount of profit attributable to the sale of each accused product. Rather than answering the interrogatories, the Defendants instead produced over two thousand three hundred documents to the Plaintiffs, asserting that the documents fulfilled their obligations to answer the Interrogatories under Fed. R. Civ. P. 33(d), and, in addition, constituted the universe of documents that were responsive to the Plaintiffs Document Requests. The documents that the Defendants relied upon in their Response to Plaintiffs First Summary Judgment Motion for Infringement were not included in the Defendants initial production. This despite the fact that on their face, the withheld documents are relevant to the Plaintiffs discovery requests. Indeed, the fact that the Defendants now seek to use the withheld documents to prove sales of their vwd tests -- which is the precise subject of Plaintiffs Document Request No. 3 proves as much. 1

5 2. The Plaintiffs first Motion to Compel is GRANTED Defendants reference to an undifferentiated mass of documents when responding to the Plaintiffs initial discovery requests violated the Federal Rules. See Exhibit 5 at p. 2. Thus, on March 12, 2001, Plaintiffs filed a first Motion to Compel. Prior to the April 5, 2001 hearing, but after the Plaintiffs filed their Motion, the Defendants sought to compensate for the many shortcomings in their discovery by turning over other documents that had not been provided in their initial production. 2 Again, however, the Defendants withheld the documents that are the subject of this Motion. Furthermore, Defendants maintained their refusal to answer the Plaintiffs Interrogatories. They insisted that their production of 2,300 documents was enough. Judge Goldman disagreed. On April 5, 2001, he issued an ORDER granting Plaintiffs Motion. Specifically, Judge Goldman ORDERED the Defendants to file full and complete written answers to all interrogatories on or before April 19, See Exhibit Plaintiffs try to depose Defendants GeneSearch and Whiteley On September 12, 2001, Plaintiffs served Defendants with a Re-Notice of Taking Deposition of GeneSearch Pursuant to Fed. R. Civ. P. 30(b)(6). The Re-Notice sought, among other things, all facts relating to the tests performed by GeneSearch to detect vwd in canines and all facts relating to GeneSearch s sale of tests for detecting vwd in canines. See Exhibit 7, Schedule A at 16 and 17. Further, the Re-Notice specifically stated, To the extent that any documents exist which relate to any of the subjects appearing on Schedule A, deponent is commanded to bring such documents with him or her to the deposition. See Exhibit 7 at 1. 2 The fact that the discovery was not provided until after the Motion was filed did not absolve the Defendants for their acts. See Fed. R. Civ. P. 37(a)(4)(A)(courts shall award costs where discovery is provided after the motion to compel is filed). 2

6 The Defendants produced Whiteley as their Rule 30(b)(6) deponent. She was, however, unable to provide testimony on many of the topics that had been designated. For example, questions concerning sales of its vwd tests went as follows: Q: Do you have any information, at this point and time, of what your total sales are for the vwd test? A: No. Q: Did you know that you were asked to provide that information pursuant to the 30(b)(6) Notice of Deposition? Are you aware of that? A: Not entirely. No. The answer is, I wasn t aware of that. Either that or if it s in there or whatever, I missed it. Q: And you re here, pursuant to the Rule 30(b)(6) Notice of Deposition to provide the information that s outlined in the Schedule A? A: Yes. Q: Just so I m absolutely clear then. A: And I m doing that to the best of my ability. Q: That s all I can ask you to do. But one of the things you were certainly asked to do was to provide the sales figures, to date, for the vwd. And I just want to make sure I have your answer on record that you can t do that. A: I can t do what. Q: Give me that number. A: Okay. Q: Is that right? Q: That s correct. 3

7 See Exhibit 8, Excerpts from Whiteley s Deposition at , lines Nor did the Defendants produce any documents related to the topics prior to the deposition, despite the Plaintiffs request. Then, two weeks after the deposition, the Defendants turned over two thousand more documents to the Plaintiffs. No explanation was offered as to what the documents were, or what deficiencies they are supposed to address. It appeared, however, that the documents reflected additional sales by Defendants of their vwd testing. If this were the case, Defendants were in violation of the Court s April 5, 2001 ORDER. After all, Defendants could not properly supplement their discovery to the Plaintiffs by employing exactly the same procedure i.e., producing a mass of undifferentiated documents to the Plaintiffs that caused the Court to issue its ORDER to Compel in the first place. That point aside, the Defendants still withheld the documents that they now insist prove their dates of sale. 4. The Plaintiffs Second Motion to Compel is GRANTED On October 22, 2001, the Plaintiffs filed a second Motion to Compel. Judge Carlson issued an ORDER granting Plaintiffs Motion on November 29, See Exhibit 9. Among other things, Judge Carlson ORDERED the Defendants to make available all Quickbook computer files or documents that relate to Defendants sales of their vwd testing kits from March 2000 to the present. Id. 3 The failure of a party to produce a Rule 30(b)(6) deponent to testify on identified topics is sanctionable. United States v. Taylor, 166 F.R.D. 356, 363 (M.D.N.C. 1996)( inadequate preparation of a Rule 30(b)(6) designee can be sanctioned based on the lack of good faith, prejudice to the opposing side, and disruption of the proceedings ); Turner v. Hudson Transit Lines, Inc., 142 F.R.D. 68, (S.D.N.Y. 1991)( a party that fails to provide a witness knowledgeable in the areas requested in a Rule 30(b)(6) notice is likewise subject to sanctions ). 4

8 5. The Defendants ignore the Court ORDER Exhibits 6, 7, and 8 to the Defendants Response to the Plaintiffs First Motion for Summary Judgment of Infringement Exhibits 1, 2, and 3 here -- show the Defendants utter contempt for Judge Carlson s ORDER. According to Defendants own papers, those documents establish the Defendants sales for their vwd testing. Yet despite Judge Carlson s ORDER i.e., to make such documents available the Defendants failed to comply, deliberately withholding the documents upon which they are now relying in their opposition to Plaintiffs First Summary Judgment Motion. II DEFENDANTS RESPONSE TO PLAINTIFFS MOTION FOR SUMMARY JUDGMENT OF INFRINGEMENT OF CLAIMS 15 AND 26 OF U.S. PATENT NO. 6,040,143 While the Defendants conduct, standing alone, is reprehensible, the predicate for this Motion was the Defendants May 14, 2002 Response to Plaintiffs Motion for Summary Judgment of Infringement of Claims 15 and 26 of United States Patent No. 6,040,143. In their Response, the Defendants actually try to take advantage of their disregard for Judge Carlson s ORDER, and their disregard for the Plaintiffs discovery, by surprising the Plaintiffs with documents that should have been produced years ago. According to the Defendants, the documents create an issue of fact as to when the Defendants stopped selling their old vwd test. As such, the Defendants cannot seriously deny that the documents are related to their sales of vwd tests. That, after all, is exactly why the Defendants are now offering them. Defendants own actions thus prove that the documents are of the type that were specifically requested in Plaintiffs Document Request No. 3, and were ORDERED produced by Judge 5

9 Carlson, but were never turned over. The documents clearly show[] Defendant s sales for the accused product. 1. Sanctions available for disobeying a Court ORDER When a party fails to obey court order to provide or permit discovery, the court may make such orders in regard to the failure as are just. Fed. R. Civ. P. 37(b)(2). This includes: An order refusing to allow the disobedient party to support or oppose designated claims or defenses, or prohibiting that party from introducing designated matters in evidence, Jankins v. TDC Management Corp., Inc., 21 F.3d 436 (D.C. Cir. 1994) (barring defendants from presenting evidence to refute plaintiff s evidence of liability because defendants failed to produce such evidence in response to the court s order); An order striking the disobedient party s pleadings or parts thereof, General Dynamics Corp. v. Selb Mfg. Co., 481 F.2d 1204 (8th Cir. 1973) (defendant s affirmative defense and counterclaims were stricken because defendants refused to answer plaintiff s interrogatories); An order rendering a judgment by default against the disobedient party, Pauley v. United Operating Co., 606 F. Supp. 520 (E.D. Mich. 1985) (holding that default judgment against defendants was warranted where plaintiffs ignored a variety of court orders to produce numerous discovery documents, thus thwarting plaintiffs attempts to secure basic, legitimate discovery, and holding that if defendants went unpunished, there would be unspoken endorsement of flagrant disregard for the district court s orders); 6

10 An order treating as a contempt of court the failure to obey previous orders to produce discovery information, Pesaplastic, C.A. v. Cincinnati Milacron Co., 799 F.2d 1510 (11th Cir. 1986) (holding defendant in contempt for refusal to comply with document production ordered by court and consistent obstruction of the discovery process); An order requiring the party failing to obey the order, or the attorney advising that party, or both, to pay the reasonable expenses, including attorney s fees caused by the failure, unless the failure was justified or the award or expenses was unjust, Evans v. Connecticut, 967 F. Supp. 673 (D. Conn. 1997) (defendants repeated failure to comply with discovery orders merited sanctions of reimbursement of plaintiff s attorney fees for time and services expended on noncompliance); and Any other orders that are just, including a finding that the disobedient party s conduct is exceptional so as to permit the award of attorney fees to the prevailing party, Pall Corp. v. Micron Separations, Inc., 792 F. Supp (D. Mass. 1992) (holding that the infringer s refusal to make discovery when faced with clear requests made the case exceptional and warranted the awarding of attorneys fees to the patentee), rev d on other grounds, 66 F.3d 1211 (Fed. Cir. 1995). 2. Sanctions available for refusing to provide discovery Even absent a court order, the Defendants failure to produce the documents attached at Exhibits 1, 2, and 3 violated their duties as set forth under Fed. R. Civ. P. 26(e)(2). A party that fails to comply with Rule 26(e)(2) may be sanctioned under Fed. R. Civ. P. 37(c)(1). Rule 37(c)(1) states the following: A party that without substantial justification fails to disclose information required by Rule 26(a) or 26(e)(1) or to 7

11 See Fed. R. Civ. P. 37(c)(1). amend a prior response to discovery as required by Rule 26(e)(2), is not, unless the failure is harmless, permitted to use as evidence at a trial, at a hearing, or on a motion any witness or information not so disclosed. In addition to or in lieu of this sanction, the court, on motion and after affording an opportunity to be heard, may impose other appropriate sanctions. In addition to requiring payment of reasonable expenses, including attorney s fees, caused by the failure, these sanctions may include any of the actions authorized under Rule 37(b)(2)(A), (B), and (C) and may include informing the jury of the failure to make the disclosure. Defendants first failed to produce the documents attached at Exhibits 1, 2, and 3 when responding to Plaintiffs initial discovery requests, even though the dates of the Exhibits would indicate that they were available prior to their initial document production in October of Further, even if the Defendants did not have access to the Exhibits until later, their failure to supplement their response violates Fed. R. Civ. P. 26(e)(1). Accordingly, sanctions may be imposed against Defendants per Rule 37(c). Rule 37(c) provides for many of the same sanctions discussed above. However, unlike Rule 37(b), sanctions are awarded under 37(c) regardless of whether the discovery failings were the subject of a previously issued court order. Consequently, sanctions under Rule 37(c) are self-executing and automatic and must be ordered by this court. 146 F.R.D. at 691; Finley v. Marathon Oil Co., 75 F.3d 1225 (7th Cir. 1996). III THE REQUESTED RELIEF Defendants failure to produce the documents at Exhibits 1, 2, and 3 in response to Plaintiffs discovery requests, in response to this Court s ORDER, and as required by Fed. R. Civ. P. 26(e)(2), warrants sanctions. As a direct result of the Defendants acts, Plaintiffs: 1. incurred the costs and fees associated with preparing this Motion; 8

12 2. incurred the costs and fees associated with preparing and arguing two previous Motions to Compel asking the Court to ORDER Defendants to comply with Plaintiffs discovery requests; and 3. incurred the costs and fees associated with deposing Whiteley and GeneSearch without the full complement of documents upon which Defendants will apparently rely in their defense of this action, as shown by their Response to Plaintiffs First Motion for Summary Judgment of Infringement. Defendants behavior thus warrants the following relief: 1. Defendants should be SANCTIONED by being prohibited from using the documents at Exhibits 1, 2, and 3 at trial; 2. Defendants should be SANCTIONED by being prohibited from using the documents at Exhibits 1, 2, and 3 at any hearing; 3. Defendants should be SANCTIONED by having Exhibits 1, 2 and 3, and all portions referencing the Exhibits, stricken from their May 14, 2002 Response; 4. Defendants should be SANCTIONED by awarding Plaintiffs their reasonable expenses, including attorney s fees, incurred by the Plaintiffs in filing the previous two Motions to Compel, and this Motion for Sanctions; and 5. Defendants should be SANCTIONED under Fed. R. Civ. P. 37(c)(1) by finding that their conduct during the course of this litigation is exceptional as set forth in 35 U.S.C IV CONCLUSION GRANTED. For the reasons set forth above, Plaintiffs request that their Motion for Sanctions be 9