opinion in goodyear tire and rubber behavior cited in our reply brief which came out between the our first brief in our reply brief this court vacated and remanded a sanctions order for a determination of the amount of costs and attorney's fees that should be awarded sanctions that were in part punitive so to hear that special appendix eighty three the district court acknowledged that you say that these are punitive as i understand it the amount was calculated directly successful motion and in taking additional depositions that were required because of the misconduct of your client is that is that wrong the amounts were calculated from from plaintiff's attorneys fees so if it's if it's if the amount of the award is the amount of the fees that were expended as a result of the misconduct where is the punitive component of the sanction component is because not all the fees were incurred because the misconduct virginia properties follows on i'm sorry i just i know that case i'd like to know about this case and i'd like to like you to explain to me the statement that you just made that not all the fees were incurred as a result of the misconduct that's not something from virginia properties that's something from this record so please explain and i'm happy to hear it thank you your honor yes the difference is a good portion and the district court has the obligation to suss out what is what here was not incurred because of the delayed production which was substantially complete by by early september two thousand and thirteen before the second round of depositions the majority of the fees here are for the forensic investigation yes i did not i did exactly i did not understand that this was compensation for de laid production but that it was compensation for the necessity of undertaking a forensic examination because of what was learned in the depositions so why am i am i wrong about that your honor because the magistrate dollars order that permitted the forensic investigation said in it appears that there has been some loss of non transactional data what we've referred to as unstructured e s i that is e mails word files that could be stored on a it an amount and controversy in excess of the three figure range that is less than one thousand dollars in u s profits which is what is demonstrated here clips chose to go on an incredibly expansive discovery for that was not caused by the failure to provide the deposition clips said we think there's more out there and was was pounding the table in front of a magistrate on here and said let us go find the ultimate result here your or them from it asserted again and again to the district court that they had evidence that there were more sales ultimately there was no such evidence and judge broderick even in the orders appealed from found that the global gross sales were seven thousand eight hundred eighty nine dollars why we have a sanctions order for you and not a reason to believe that the defendants had failed to disclose certain information and indeed had perhaps  destroyed some information is that not what the very basis for this extensive investigation was in other words as i understand you just said this was because the plaintiffs said there are big damages and the message said fine go ahead and have this forensic investigation i thought there was a step in the middle plato said that we think there are big damages and one reason we think that is because there is evidence of spoliation they said that but but the ultimate findings here looking through again separating the structured data which even again even in judge broderick's decisions deals with generally the amount in controversy from the unstructured which here affects willfulness and that's expressly i hear that i mean i understand that is that the basic point here that we should divide this into two components one as to which there was a finding of spoliation one as to which there was not and require the district court to disaggregate the attorneys fees as to what was the cost of investigating the structured electronic information as to which in the end there was no finding of misconduct correct there was a delay but that delay was remedied before the second set as much as but i guess i'm still puzzled about that because you don't know until it's done whether there is in the and a finding of going to be a filing of spoliation ex ante why is it unreasonable based on what was known at that time for the magistrate judge to permit this inquiry in other words if you guys are destroying one set of evidence why should the inquiry be limited to oh just look at this do a frenzy examination of that and don't go any further to see what else they might have destroyed a seven thousand dollar case is some evidence and the magistrate judge says gee as a result of that i think we should look into seeing whether they destroyed anything else the other side undertakes that inquiry at its own risk because if it turns out that only some things were destroyed and not others that any expenses that was related to looking at the other category of information cannot be recovered even though the whole problem is that your guys are spoliation from the beginning why is that a reasonable way to conduct the discovery process in some because it is fundamentally unreasonable to spend two point seven million dollars on a claim that the district judge initially and magistrate dahlan juror has said this is a sub and ten thousand dollar claim particularly when there were multiple rule sixty eight settlement offers including a permanent junction this was a case only about money on a case it was one of those real sixty eight offers ultimately for four hundred thousand dollars yes your honor for this three figure case you're saying yes your honor at some point you have to try to stop the bleeding this is an effort to escape the kafka esque world of discovery being pursued for discoveries and if we look at this case in general your honor this goes to the issue of what success was there on this odyssey to search for things cliff said before they went out to inspect we have plenty of evidence of willfulness which is what's in the unstructured data they already had more than forty thousand e mails and lucy documents on a case worth in the three figure ange and all they did at the end is come back and say all right we've gathered up seven hundred thousand plus more files and documents we've also had a months long forensic investigation and clip said well the the the evidence that we bothered to look at in those seven hundred thousand documents is cumulative of what we had before there is no material change you know in a in a document production the lawyer doing the production is happy to produce one hundred thousand documents if he or she can only with all three that's because unless you have thorough production you don't know whether you're seeing the documents that are smuts variously called smoking guns or you know alive or hot or whatever so the fact that a large number of documents are produced doesn't mean that all the documents have been produced or that all of the most sensitive and important documents most germane documents have been produced that's true but having been given so many documents in the beginning and so much opportunity to plumb the prose individual computers and systems at this point your honor it strikes me as reasonable that the plaintiff should have been required to look at that document to say something here suggests that something is missing that would actually change the game a bit and there's nothing it has for the good years of principle the the district court said that ritually everything that was being assessed was in connection with the the the misconduct or possible spoliation you want you weren't really saying that that if there's small in and substantial deviations you want that all redone your argument is that there's a there's a whole seven figure component here that should be charged to to that's the entire universe there was then disclose the entire universe of the number of infringing headphones that were sold so and so and so what was your what was the purpose of a seven figure investigation or halfway around the world well first of all you have to take a step back and it wasn't just that documents were provided late but we'd already gone to hong kong taken deposition found out a litigation hold with never put in place and when one was put in place it was orally only there were a lot of what the court found these a lot of room for spoliation i agree with yes question is if the question is how many of these headphones with  with the impermissible mark were sold why couldn't that just have been determined as categorically from the structured yes on well i i don't believe that the structured e s i i believe that that was also there's no that there's no finding used i understand that but i think there are errors of law on the on the part of the district court in that finding but even if you're justifying the that caused the numbers to go up and what the court found is even when our experts went over there and there were there was a lot of discussion before about what would be produced who would produce what would be produced it was agreed to by the parties when we got over there there was a lot of delay that's what the court found the the information was wiped was i get it that it was the other and you're saying that you know if we believe the court and the court even said we could still there hasn't been a finding of what are there hasn't been a hearing on this yet and right and that we're a little bit hampered by the fact that this is an interlocutory appeals that everybody can still both sides can still make assertions about what amounts might be proven at a trial but that is where we are and i have not seen any evidence that you've uncovered larger quantities of infringing sales than what has been the case from the beginning even assuming that so we would not have known that until we went over and get to them is that is that the essence of your position then that once the defendants have been shown to have some information and to have failed to put a litigation on then it becomes reasonable for the court to permit you to undertake an investigation because you don't know all the information they've provided has thus been rendered unreliable and you need to undertake that investigation because they of their wrong point yes and this court found a lot of spoliation this wasn't just a small amount it just happens to be the case that the lot of spoliation was with respect to things like e mails that are not the direct evidence sales records that you were looking for and it unstructured e mails and all that it went through the proper look at the preponderance of the evidence they looked at the party having control over the evidence had an obligation to preserve the records were destroyed and at the detroit so they went through that when they did it when they went with the sales database which is sales database is different it's different than e mails when you go in and you look at a laptop or you can find if you look and it was very sophisticated here it was very tough but you can look and you can find where things were changed when you have a sales database it's meant to change so the only way that you can tell if something is missing from before as if there is historical data and what happened is the court said well you didn't find anything in the sales database is any different than what the defendants and sells gave you four years ago hundred offending headphones in january and a hundred were sold infirmary the opening account and in march would be two hundred have been sold well if if if no one had no one had it touch the sales database after after the the forensic team that's correct to come but i believe what the court did was sort of bootstrap itself that said well there isn't i don't see anything here but the problem is the sales databases when there are changes you're not going to see it well is there some argument here i thought i found in your brief some argument there were in the normal course backup files are made to be largely a factual argument that the district court was made to the district court in the district court didn't accept but is it is it that your argument is that to take in january there's one hundred sold  there's a backup file that says january one hundred sold and then in february there are more sales and then if somebody altered that you wouldn't be able to go back and if the  won't be able to go back and check whether the actual cumulated information was retained or whether somebody messed with it in the interim that's correct yes that's correct and where i think the court erred as a matter of law that it's not just factual is that he states eeprom had a legal obligation to preserve its in its dynamic databases and the only way to do that is to preserve those historic backup that's the only way the factual finding that cuts against you here because the court found that the that the backup files were created as as a backup for some kind of disaster or emergency ok if any of that is so that is a matter of law they didn't have a duty i would like to address i think that's very important and i do believe that is another error of law under which the court talked about a disaster backup tape one that is not that you're not able to access it's determined by the medium of the backup in the blocky that was a tape these were not tapes there was no whether or not it's accessible or inaccessible that burden would have been on a pro to show there is no showing of that they just call them back up just because they're back up use mediums data is collected may change over time yes as i ere similar reason under federal rule twenty six b to be judge sheindlin enumerated five categories of sources of active on line data near line data offline storage in archives and backup tapes and erased fragmented or damaged data those last two are the two that she talks about tapes it's that it is the storage is a blocky says that twenty six follows that it's not about whether it's back up but it seems to insurance against disaster but it's not the purpose it's still searchable it's searchable so is not searchable what ever they made it they are not allowed to destroy it once the litigation is in place because it findings of the district court as to where there was foliation and where there was not there is a rather simple legal issue and that is this if it is reasonable because one side good evidence so there is a reasonable basis for thinking so and has done structured the discovery if it is reasonable as a result of that to undertake a large investigation e is the  sanction that is applied for the original misconduct that leads to that investigation is the amount of the reasonable sanction determined by what it was reasonable to allow as an investigation ex ante or buy the results that come x hopes that it turns out that the only spoliation give or take was more or less what led to the investigation not anything new only they had that knowledge if we did have that knowledge even though i know i'm not asking about anybody's knowledge i'm asking a legal question the legal question is is the reasonable sanction for the misconduct that lead to the investigation based appropriately on what was the reasonable scope of an investigation to undertake war on the outcome that ultimately is determined as to whether there was or was not a greater degree of spoliation than was shown in the first place that's the legal question i know what each side's position is on that my simple question is do you have any case or any authority that tells that we should look to tell us the answer to that question and i'm going to ask him the same thing or do we have is that kind of question of first impression we need to deal with i whether it's on the reasonable i think the cases that we cited in our brief would support that it is on what you would assume would be the reasonable the reasonable scope of that investigation and i don't i don't know how even just common sense right now because otherwise if you get to the end and it turns out to have been an unsuccessful expedition you are still saying the reason for the unsuccessful expedition was that they engaged in this conduct in the first place that made it if the expedition was reasonable based on that then they appropriately should be made to pay that large sanction for the misconduct and i don't think you can play those games they're the ones who know and if they had been upfront to begin with that's the logic of your on the logic of your position is if it was only a little bit of misconduct in the first place and then it turns out that that's all that's ever uncovered then exposed you shouldn't be required to pay for all the other inquiries that were done i think that's true and again particularly we have to look at here the proportionality and what does that depend on the x post or are you really having to argue that the original authorization must have been dis proportionate in the first place because my problem is if it was reasonable based on what the showing was in the first place to permit the others to do this big investigation why are they undertaking that at their own risk if it's reasonable to think that based on the misconduct that was shown in the first place that this is a reasonable thing to do then why aren't you appropriately sanctioned for the original showing of misconduct  alone whatever the finding is that yeah there was really misconduct there why isn't that a reasonable basis for all the things that they did it's again a magistrate on you're allowed them to go out and look saying you haven't showed me this is more than a three figure case i'm going to let you go look matter what the of course they haven't shown that yet the issue is whether there is a reasonable basis to think based on the misconduct that was committed that maybe there's a lot more here and the answer here your honor is no there was no reasonable basis to think and let me tell you why ok so you know so you really are challenging if not the authorisation to do it at least any idea that that whole investigation stemmed from a reasonable extrapolation from misconduct in the first place correct your honor the forklifts ever went out on this on this part for which they for which the order says they're getting their fees and costs they had as i mentioned forty two thousand weekly sales reports again if as clips has wished to speculate throughout this entire case there were a lot more sales of these things they would have been in those reports those reports provide another layer of cumulative information which you're talking about may not be reliable but again we have again you're on the this goes back this is like being able to take a snapshot on a sales report from before the case was filed in some cases because you can go back and forensically date these e mails and say all right you know we see that the reports of sales are shown in on this on this electronic piece of evidence that we know was generated before the case was ever filed and we can match that up against what we see here and what else is in the match that up against what's in the in the live databases you're going mad set up against the claims argument is that there was no basis for for the conduct of this  forensic analysis rather than as i heard you arguing your earlier that and that the disproportion of it defeats the reasonable but both arguments are there your honor because it may have been it may have been reasonable and we actually stood up in court i will acknowledge and says and clips proposed in its motion that there be a court appointed investigator and we said again looking for a way to end this kafkaesque nightmare for any pro where it's a lawyer's case it's run so far out ahead of what was well known by this time to be the the underlying value of the case and  accepted the idea that if if a court appointed expert were to come in and do a targeted investigation of the structured data to verify already bunk what was what had been reported that could have been appropriate but that's not a two point seven million dollar operation that's a possibly a two hundred thousand dollars and the two hundred thousand would have been grossly disproportionate to what you're talking about is the middle three figure it would have been but not so not nearly so bad as two point seven million of course and what if what is there any factual basis i take it what you're really asking us for has to be that we send it back to the district court to undertake some sort of further factual inquiry as to exactly what because there's no finding by the district judge that a two hundred thousand dollar investigation would have been adequate or anything like that so what what is it that our instruction to the district judge should be one the district court has to suss out what is really directly due to two spoliation and not due to a desire just to keep investigating and that's under the virginia properties case what do you what do you mean by  guess the district judge did what the district judge thought was correct if we're going to say what he did was wrong we've got to give him some rather specific instructions so what do you mean by do to the spoliation right i mean i mean the extent of the extent of the structure investigation was excessive as well as it an extent of the unstructured investigation the second thing i would ask your honor to direct the court is as we put in our briefing of how is how is any of that different from what the judge actually did i mean what what is the judge going to ask about what kind of experts are going to come in and testify about what in order to make a finding as to what was a reasonable response to the original showing i think there is an inquiry into how far did clips reasonably have to go before it came in and misrepresented ex parte to the district it's we don't need the rhetoric i'm trying not get at what how do you make this fact finding it has nothing to do with whether somebody made an ex parte application that was then promptly revealed to you and then the rest of the inquiry was conducted on notice the way it should be that's not the focal point i want to understand what kind of if i'm the district judge here what kind of facts am i to look at or are we just to give some vague instruction this seems like it was too much kindness go do it over again tell me what the district judge is supposed to ask i think a district judge is supposed to ask what was really reasonably necessary here and that is both under the virginia properties case and under the barfield factors what believe that in a region we did your honor we talked about again what what what actually was gained through this whole thing other than to keep asking that's the ex post that's at the end of the day it didn't work what i'm trying to get and what i think we've been discussing was was it reasonable in the first place what is a reasonable inquiry to undertake in response to the original showing and if they and your argument is and i guess you still have an argument doesn't persuade me i  think but ok you have an argument that if at the end it's just more money than the results expos indicate that they can be awarded that kind of sanction but the issue we're talking about now is what was reasonable acts and today for them to inquire into and that isn't determined by what they found that's determined by what it was reasonable to look for in the first place i e you know i think there are some that are right and that's why i stressed your honor what they had before they ever went out on us odyssey that they did have ample information their own investigators disclosed in the record bought a dozen different copies ultimately of these things all through disguised purchases and the first clue clip should have been one hundred percent every one of those records was disclosed in the materials that a pro handed over right away and these were in these were detailed sales records that had they given us have known which with the undercover a pro statements of hearings and things like that earlier