Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_04-cv-03836/USCOURTS-cand-3_04-cv-03836-54/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 15:1 Antitrust Litigation

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By order filed March 14, 2007, the Court took the matter under submission.

United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

NSIGHT, INC.,

Plaintiff,

 v.

PEOPLESOFT, INC.,

Defendant

 /

No. C 04-3836 MMC (MEJ)

ORDER GRANTING IN PART AND

DENYING IN PART DEFENDANT’S

MOTION FOR SANCTIONS

Before the Court is defendant Oracle USA, Inc.’s motion for sanctions, pursuant to

28 U.S.C. § 1927, Rule 26(g) of the Federal Rules of Civil Procedure, Rule 1-4 of the Civil

Local Rules, and the Court’s inherent power. Plaintiff nSight, Inc. has filed opposition. 

Defendant has filed a reply and, with leave of court, a supplemental declaration, to which

plaintiff, with leave of court, has filed a response. Having considered the papers filed in

support of and in opposition to the motion, the Court rules as follows.1

Pursuant to § 1927, a district court may order an attorney who “so multiplies the

proceedings in any case unreasonably and vexatiously . . . to satisfy personally the excess

costs, expenses, and attorney’s fees reasonably incurred because of such conduct,” see 28

U.S.C. § 1927; such order must be “supported by a finding of subjective bad faith,” see In

re Keegan Management Co. Sec. Litig., 78 F. 3d 431, 436 (9th Cir. 1995). Pursuant to the

Case 3:04-cv-03836-MMC Document 286 Filed 03/19/07 Page 1 of 6
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Civil Local Rules of this District, a “failure by counsel or a party to comply with any duly

promulgated local rule or Federal Rule may be a ground for imposition of any authorized

sanction.” See Civil L.R. 1-4. Additionally, a district “court has the inherent power to

sanction a party or its lawyers if it acts in willful disobedience of a court order or when the

losing party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons, as well

as for willful abuse of the judicial processes.” See Gomez v. Vernon, 255 F. 3d 1118,

1133-34 (9th Cir. 2001) (internal quotation, citation, and alterations omitted).

A. Pursuit of Claims After Close of Discovery

Defendant argues that plaintiff, as of the close of discovery on December 30, 2005,

knew it lacked any evidence to support certain of plaintiff’s causes of action, specifically,

plaintiff’s then-remaining antitrust causes of action, plaintiff’s trade disparagement cause of

action, and plaintiff’s causes of action pertaining to “Teaming Agreements” with respect to

IMI BEVCORe (“IMI”) and Interstate Battery System of America (“IBSA”). Consequently,

defendant argues, plaintiff’s pursuit of said causes of action after the close of discovery

constitutes sanctionable behavior.

At the outset, the Court finds defendant has not made a sufficient showing that

plaintiff itself was aware of the nature of the discovery, or lack thereof, or that plaintiff

directed or otherwise was aware of the particular choices made by plaintiff’s counsel after

the close of discovery. Consequently, the Court declines to find plaintiff itself acted in bad

faith or otherwise had the requisite state of mind for purposes of a finding that plaintiff

engaged in sanctionable behavior. Cf. Miller v. Cardinale (In re Deville), 361 F. 3d 539, 

(9th Cir. 2004) (affirming monetary sanctions imposed against both party and his counsel,

where both party and counsel engaged in sanctionable behavior).

With respect to plaintiff’s counsel, the Court first notes that plaintiff’s counsel has

offered various explanations for his decision to pursue, after the close of discovery, certain

of the above-referenced causes of action. Specifically, plaintiff’s counsel has provided

various reasons for his continued pursuit of the antitrust causes of action, the trade

disparagement cause of action as it pertained to IMI, and plaintiff’s causes of action

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pertaining to a “Teaming Agreement” with respect to IMI. Having considered the proffered

reasons, the Court finds that, although a serious question remains as to the propriety of

plaintiff’s counsel’s conduct, there is an insufficient showing by defendant to support a

finding that the continued prosecution of such causes of action after the close of discovery

was in bad faith or was otherwise with the requisite state of mind for purposes of a finding

that plaintiff’s counsel engaged in sanctionable behavior.

Plaintiff’s counsel has failed, however, to offer any explanation as to why, after the

close of discovery, he pursued the trade disparagement cause of action, to the extent such

cause of action included a claim that defendant made disparaging remarks about plaintiff to

IBSA, or the causes of action pertaining to defendant’s alleged breach of “Teaming

Agreements,” to the extent such causes of action included a claim that defendant breached

a “Teaming Agreement” with respect to IBSA. The Court nevertheless has reviewed the

record to ascertain whether an explanation consistent with a finding that plaintiff’s counsel

did not act in bad faith with respect to such claims may be evident therefrom. No such

explanation is evident.

What is evident, however, is that, as defendant has shown, plaintiff obtained no

discovery from defendant, from IBSA, or from any third party, to support plaintiff’s claims

that defendant defamed plaintiff to IBSA or that an alleged “Teaming Agreement” between

plaintiff and defendant concerning IBSA existed, let alone was breached. Further, it is clear

that plaintiff obtained no evidence outside the discovery process to support such claims;

plaintiff provided no disclosure of any such evidence to defendant and, in its opposition to

defendant’s motion for summary judgment, failed to submit any evidence to support such

claims, irrespective of its source.

In sum, plaintiff’s counsel chose to pursue the above-referenced claims pertaining to

IBSA after the close of discovery, thus requiring defendant to incur fees and costs to

defend itself against such claims, even though plaintiff’s counsel knew plaintiff would not be

able to support those claims with evidence. As noted, plaintiff’s counsel has offered no

explanation for such conduct, and the Court has ascertained none from the record. Under

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such circumstances, the Court finds plaintiff’s counsel, after the close of discovery, acted in

bad faith with respect to his continued prosecution of the above-referenced claims

pertaining to IBSA.

Defendant’s counsel attests that defendant incurred, after the close of discovery,

$24,700 in fees and $1771.94 in costs to defend against plaintiff’s trade disparagement

cause of action. Having reviewed, inter alia, defendant’s time sheets and the method

defendant employed to allocate fees and costs among plaintiff’s causes of action, and

having considered plaintiff’s objections thereto, the Court finds the hours, rates and

amounts claimed by defendant to defend against the trade disparagement cause of action

are reasonable. The trade disparagement cause of action, however, contains both a claim

pertaining to IMI and a claim pertaining to IBSA, and defendant has not expressly allocated

the fees and costs incurred between those claims. Nevertheless, nothing in the record

suggests that either the work performed or costs incurred should be other than equally

apportioned between the two claims comprising the trade disparagement cause of action. 

Accordingly, with respect to the claim pertaining to IBSA within the trade disparagement

cause of action, the Court finds it appropriate to sanction plaintiff’s counsel, pursuant to §

1927 and the Court’s inherent power, in the amount of $13,235.97, which amount

represents defendant’s reasonably-incurred attorney’s fees in the amount of $12,350 and

reasonably-incurred costs in the amount of $885.97.

Defendant’s counsel additionally attests that defendant incurred, after the close of

discovery, $25,902.50 in fees and $1771.94 in costs to defend against plaintiff’s causes of

action pertaining to the alleged “Teaming Agreement” concerning IBSA. Again, having

reviewed defendant’s time sheets and method of allocation, and having considered

plaintiff’s objections thereto, the Court finds it appropriate to further sanction plaintiff’s

counsel, pursuant to § 1927 and the Court’s inherent power, in the amount of $27,674.44.

B. Other Conduct

Defendant argues that, during the course of the instant litigation, plaintiff filed an

unmeritorious motion for entry of default, failed to appear at a noticed deposition, failed to

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By order filed May 11, 2006, Magistrate Judge James rejected plaintiff’s argument

that the notice was procedurally deficient.

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respond to certain discovery requests, did not comply with certain orders issued by

Magistrate Judge Maria Elena James, and responded to defendant’s motion for summary

judgment in a procedurally improper manner. Such acts and omissions, according to

defendant, constitute sanctionable behavior.

Having reviewed the record with respect thereto, the Court finds an insufficient basis

exists to conclude that any such act or omission rose to the level of sanctionable conduct

on the part of plaintiff itself, and, with the one exception discussed below, on the part of

plaintiff’s counsel as well.

The one exception concerns plaintiff’s counsel’s failure to appear with Henry Gong

(“Gong”), plaintiff’s principal, at Gong’s deposition noticed by defendant for December 6,

2005. Plaintiff’s counsel does not dispute that the failure to appear was a deliberate

decision. Plaintiff’s counsel argues, however, that his decision is not sanctionable because

he believed, at the time he did not appear, that defendant’s deposition notice was

procedurally deficient.2

 Plaintiff’s counsel fails to explain why, however, when he received

what he believed was a deficient notice, he failed to file a motion for a protective order, see

Fed. R. Civ. P. 26(c), or, at a minimum, to notify defendant informally that neither he nor

Gong would attend the noticed deposition. As a result of counsel’s unilateral decision to

simply disregard the notice, defendant unnecessarily incurred fees on December 6, 2005,

which defendant attests are in the amount of $552.50. (See Hughes Decl., filed December

12, 2006, Ex. C.)

In plaintiff’s opposition, plaintiff’s counsel correctly notes that sanctions under

§ 1927 are inappropriate upon a finding of “ignorance or negligence.” See Barber v. Miller,

146 F. 3d 707, 711 (9th Cir. 1998). Plaintiff’s counsel has not, however, submitted a

declaration to the effect that he was ignorant of the proper procedure for challenging a

deposition notice. Indeed, the record establishes that plaintiff’s counsel was well aware

that the proper procedure for challenging a noticed deposition is to move for a protective

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order, given that plaintiff’s counsel, on November 18, 2005, filed a motion for a protective

order in which he challenged defendant’s notice of the deposition of Shawn Stufft. (See

Mot. for Protective Order, filed November 18, 2005, Docket # 69.)

Under the circumstances, the Court finds plaintiff’s counsel’s failure to appear on

December 6, 2005 was in bad faith.

Accordingly, the Court finds it appropriate to sanction plaintiff’s counsel, pursuant to

§ 1927 and the Court’s inherent power, in the additional amount of $552.50.

CONCLUSION

For the reasons stated, defendant’s motion for sanctions is hereby GRANTED in

part and DENIED in part, as follows:

1. Defendant is awarded sanctions against plaintiff’s counsel in the total amount of

$41,462.91.

2. In all other respects, the motion is DENIED.

IT IS SO ORDERED.

Dated: March 19, 2007 

MAXINE M. CHESNEY

United States District Judge

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