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Case Dismissed and Sanctions Imposed for Repeated and Willful Failure to Respond to Contention Interrogatory

July 26, 2012

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Last Month at the Federal Circuit - August 2012

Judges: Bryson (author), Dyk, Moore

[Appealed from: E.D.N.Y., Judge Seybert]

In Rates Technology, Inc. v. Mediatrix Telecom, Inc., No. 11-1384 (Fed. Cir. July 26, 2012), the Federal Circuit affirmed a district court’s imposition of discovery sanctions against the lead plaintiff attorney in a patent infringement action where the plaintiff repeatedly and willfully failed to respond to a contention interrogatory.

Rates Technology, Inc. (“RTI”) sued Mediatrix Telecom, Inc. (“Mediatrix”) for infringement of two patents relating to systems for minimizing the cost of placing long-distance telephone calls. Mediatrix propounded interrogatories seeking RTI’s theory of infringement, and a magistrate judge twice ordered RTI to provide a meaningful response, but RTI failed to do so. The magistrate judge ordered Mediatrix to provide discovery to assist RTI in responding to the interrogatories, and gave RTI ten days upon receiving Mediatrix’s discovery responses to object. Mediatrix produced thousands of pages of technical drawings and other documents to RTI. RTI did not object to the production within ten days or produce a meaningful response. The magistrate judge ordered RTI to respond to the contention interrogatories for the third time.

Almost five months after Mediatrix’s production, RTI objected to it and sought leave to serve additional interrogatories on Mediatrix, which would exceed the twenty-five interrogatories allowed under Fed. R. Civ. P. 33(a)(1). RTI later claimed that responses to the requested interrogatories were necessary for RTI to respond to Mediatrix’s contention interrogatories. The magistrate judge for a fourth time ordered RTI to respond to the contention interrogatories, and warned RTI and its lead counsel, Mr. James Hicks, that she would recommend dismissing the case if RTI failed to do so.

RTI provided a supplemental discovery response to Mediatrix, which the magistrate judge found inadequate. Mediatrix moved for sanctions, seeking dismissal of the suit and attorneys’ fees. The magistrate judge filed a report and recommendation agreeing with Mediatrix that the case should be dismissed. The magistrate judge found that the prefiling inquiry conducted by RTI and Mr. Hicks was not reasonable or made in good faith, and denied RTI’s request to serve additional interrogatories. The magistrate judge assessed attorneys’ fees equally against RTI and Mr. Hicks, stating that the sanctions motion brought under Fed. R. Civ. P. 37(b) put Mr. Hicks on notice of monetary sanctions if the district court found a violation. The district court entered an order adopting the magistrate judge’s recommendations. Mr. Hicks appealed.

On appeal, the Federal Circuit rejected all of Mr. Hick’s arguments. First, the Federal Circuit rejected Mr. Hicks’s assertion that he was improperly sanctioned for failing to produce information he did not have. The Court recognized that, unlike fact interrogatories, the contention interrogatories-at-issue simply asked Mr. Hicks for RTI’s theory of infringement. The Court held that Mr. Hicks had the information necessary to respond to Mediatrix’s interrogatories, noting that RTI did not object to Mediatrix’s production within the permitted ten days.

Second, the Court rejected Mr. Hicks’s argument that he was denied adequate notice of the possibility of sanctions. Specifically, the Court found that the magistrate judge’s final warning to RTI and Mr. Hicks to comply with the district court’s directives and Mediatrix’s motion for sanctions under Rule 37(b) placed Mr. Hicks on clear notice of the possibility that he would be subject to personal monetary sanctions.

Third, the Court also rejected Mr. Hicks’s argument that the magistrate judge abused her discretion in denying his motion to serve additional interrogatories. The Court found that RTI had not persuasively explained a need to serve more than twenty-five interrogatories, and that RTI should have been able to answer Mediatrix’s contention interrogatories without serving additional discovery requests.

Fourth, the Court rejected Mr. Hicks’s argument that he could not be sanctioned because he did not personally violate a discovery order or advise his client to do so. The Court held that Mr. Hicks, as lead counsel for RTI, had a duty to comply with the district court’s orders. The Court rejected Mr. Hicks’s attempt to shift the blame for discovery abuses to another attorney who was not listed on the district court’s docket.

Finally, the Court rejected Mr. Hicks’s argument that the magistrate judge and the district court abused their discretion in failing to grant him an opportunity for oral argument on the motion for sanctions. The Court held that, “[u]nder Second Circuit law, which applies to this non-patent issue arising from a district court in that circuit, there is no general right to make an oral presentation in civil matters, even on dispositive motions.” Slip op. at 11. Although “due process requires that courts provide notice and opportunity to be heard,” “a full evidentiary hearing is not required; the opportunity to respond by brief or oral argument may suffice.” Id. (quoting In re 60 E. 80th St. Equities, Inc., 218 F.3d 109, 117 (2d Cir. 2000)). The Court noted that Mr. Hicks had the opportunity to address the sanctions both orally at a hearing and with written briefs.