Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-15-01774/USCOURTS-ca13-15-01774-0/pdf.json

Parties Involved:
Dow Chemical Company
Intervenor
International Trade Commission
Appellee
Organik Kimya Netherlands B.V.
Appellant
Organik Kimya US, Inc.
Appellant
Organik Kimya, San. ve Tic. A.S.
Appellant
Rohm and Haas Chemicals LLC
Intervenor
Rohm and Haas Company
Intervenor

Document Text:

United States Court of Appeals 

for the Federal Circuit ______________________ 

ORGANIK KIMYA, SAN. VE TIC. A.S., ORGANIK 

KIMYA NETHERLANDS B.V., ORGANIK KIMYA US, 

INC.,

Appellants

v.

INTERNATIONAL TRADE COMMISSION,

Appellee

ROHM AND HAAS COMPANY, ROHM AND HAAS 

CHEMICALS LLC, DOW CHEMICAL COMPANY,

Intervenors

______________________ 

2015-1774, 2015-1833

______________________ 

Appeal from the United States International Trade 

Commission in Investigation No. 337-TA-883.

______________________ 

Decided: February 15, 2017

______________________ 

CATHERINE EMILY STETSON, Hogan Lovells US LLP, 

Washington, DC, argued for appellants. Also represented 

by JOHN ROBERT ROBERTSON, BENJAMIN HOLT. 

SIDNEY A. ROSENZWEIG, Office of the General Counsel, 

United States International Trade Commission, WashingCase: 15-1774 Document: 99-2 Page: 1 Filed: 02/15/2017
2 ORGANIK KIMYA v. ITC

ton, DC, argued for appellee. Also represented by DOMINIC 

L. BIANCHI, WAYNE W. HERRINGTON. 

RAYMOND N. NIMROD, Quinn Emanuel Urquhart & 

Sullivan, LLP, New York, NY, argued for intervenors. 

Also represented by WILLIAM ADAMS, JAMES BAKER; S.

ALEX LASHER, PAUL F. BRINKMAN, Washington, DC; 

CHARLES KRAMER VERHOEVEN, San Francisco, CA. 

______________________ 

Before LOURIE, MAYER, and O’MALLEY, Circuit Judges.

O’MALLEY, Circuit Judge.

Organik Kimya San. ve Tic., A.Ş., Organik Kimya 

Netherlands B.V., and Organik Kimya US, Inc. (collectively, “Organik Kimya”) appeal from the International 

Trade Commission’s (“the Commission” or “ITC”)1 decision imposing default judgment sanctions for spoliation of 

evidence and entering a limited exclusion order against 

Organik Kimya. See Certain Opaque Polymers, Inv. No. 

337-TA-883, 2015 ITC LEXIS 139, at *5–6 (Apr. 17, 2015); 

see also Certain Opaque Polymers, Inv. No. 337-TA-883, at 

16–24, available at http://www.itcblog.com/images/

commopin883.pdf (“Commission Opinion”); Certain 

Opaque Polymers, Inv. No. 337-TA-883, USITC Order No. 

27, 2014 WL 5768586 (Oct. 20, 2014) (“ALJ Order”). 

Because the Commission did not abuse its discretion in 

entering default judgment as a sanction for Organik 

Kimya’s spoliation of evidence and further did not abuse 

its discretion in entering the limited exclusion order, we 

affirm. 

 

1 This opinion uses “the Commission” to refer to the 

entity rendering the decision in this case and “ITC” to 

refer to the party in this appeal and the agency generally.

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ORGANIK KIMYA v. ITC 3

I. BACKGROUND

This case involves trade secrets relating to opaque 

polymers, which are hollow spheres used as paint additives for interior and exterior paints to increase the 

paint’s opacity. Organik Kimya and Dow Chemical Company (“Dow”)2 both manufacture opaque polymers. Dow 

is the market leader in supplying opaque polymers to 

paint manufacturers, both in the United States and 

worldwide. Dow has maintained this position through a 

combination of patent and trade-secret protections.

In May 2013, Dow filed a complaint with the ITC requesting an investigation into whether Organik Kimya’s 

opaque polymer products infringed four Dow patents. The 

ITC granted Dow’s request, and the parties began discovery. During the proceedings, Dow amended its complaint 

to add allegations of trade secret misappropriation when 

it discovered that Organik Kimya may have coordinated 

the production of its opaque polymers with the assistance 

of former Dow employee Dr. Dilip Nene. Dow discovered 

that other former Dow employees, Dr. Guillermo Perez 

and Leonard Strozzi, also may have assisted Organik 

Kimya with its development of opaque polymers. As Dow 

attempted to obtain discovery relating to the activities of

Dr. Perez, Dr. Nene, and Strozzi, however, Dow discovered spoliation of evidence on a staggering scale. 

A. Administrative Law Judge’s Findings

1. Findings Relating to Dr. Perez

In response to a discovery order issued by the Administrative Law Judge (“ALJ”), Dow’s forensic investigators 

 

2 Rohm and Haas Company and Rohm and Haas 

Chemicals LLC became subsidiaries of Dow after Dow 

acquired Rohm and Haas in 2009. This opinion collectively refers to the companies as “Dow.” 

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4 ORGANIK KIMYA v. ITC

traveled to Turkey in February 2014 to inspect Dr. Perez’s 

laptop computer. ALJ Order, 2014 WL 5768586, at *15. 

Four days before the forensic investigation took place, and 

three days after the ALJ issued the discovery order authorizing the examination of the computer, Organik 

Kimya began overwriting the laptop’s hard drive by 

copying the Program Files folder at least 108 times. Id. at 

*15–16. While performing this overwriting, Organik 

Kimya also backdated the computer’s internal clock so 

that the metadata on the copied files would hide the fact 

that the overwriting took place only days before the 

inspection. Id. at *16. Organik Kimya even ran a program called CCleaner “multiple times to delete a large 

percentage of the C drive and all of the D drive in Dr. 

Perez’s laptop.” Id. To ensure that its efforts had been 

successful, Organik Kimya also used a program called 

WinHex at least twelve times to see whether it could 

recover any of the deleted information before the courtordered forensic investigation took place. Id. at *52.

After Dow informed the ALJ of the forensic examiners’ findings, Organik Kimya submitted a letter to the 

ALJ explaining that the IT work done on Dr. Perez’s 

computer was simply maintenance undertaken because

Dr. Perez was encountering troubles with the computer. 

Id. at *46–47. Organik Kimya also asserted that there 

was “no ill-intent or desire to destroy evidence.” Id. at 

*47.

The ALJ found Organik Kimya’s explanation to be “a 

work of fiction.” Id. He found that Organik Kimya’s 

actions made it impossible to know the exact volume and 

content of any previously recoverable data, but noted it 

was at least clear that it involved “potentially hundreds of 

thousands of files.” Id. at *16. The ALJ also found that 

there was “no innocent explanation” for Organik Kimya’s 

conduct relating to the use of the CCleaner program. Id.

at *52.

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ORGANIK KIMYA v. ITC 5

The ALJ concluded that this evidence “leads me to the 

inescapable conclusion that Organik Kimya acted in bad 

faith when, in contravention of Order No. 16, Organik 

Kimya undertook the massive spoliation of evidence on 

Dr. Perez’s laptop . . . . In fact, were there such a thing, I 

would find Organik Kimya’s egregious behavior to be 

gross bad faith.” Id. at *54. The ALJ further stated that 

Organik Kimya’s actions, “coupled with the multitude of 

lies Organik Kimya knowingly and deliberately presented 

to the undersigned to hide or explain away its wrongdoing, leave[] no doubt that Organik Kimya destroyed 

evidence on Perez’s laptop with the intent to impair Dow’s 

ability prove [sic] its allegations of trade secret misappropriation.” Id. The ALJ found the spoliated evidence 

“relevant to Dow’s allegation of trade secret misappropriation and its destruction prejudicial to Dow’s ability to 

prosecute same.” Id. at *58.

2. Findings Relating to Dr. Nene

Organik Kimya failed to identify Dr. Nene in response 

to an interrogatory seeking the identification of all former 

Dow employees who had worked for Organik Kimya. J.A. 

14878–79. When Dow discovered Dr. Nene’s involvement 

with Organik Kimya and served a subpoena upon him, 

Dr. Nene asserted that his communications with Organik 

Kimya were never of a technical nature. ALJ Order, 2014 

WL 5768586, at *22. A forensic inspection conducted by 

Dow, however, found that Dr. Nene engaged in various 

technical discussions with Organik Kimya. Id. at *23. 

Dow also uncovered two emails relating to Dr. Nene’s 

involvement with Organik Kimya and evidence of Organik Kimya’s attempt to purge those emails; these emails 

read: “Confidential information related to the consultant

[Dr. Nene] are still recorded here, they were supposed to 

be erased by the IT department,” id. at *15; and “Basak, 

can you print them and give them to me please? Then we 

should erase them from the system please,” J.A. 4073.

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6 ORGANIK KIMYA v. ITC

During discovery, Dow uncovered a suspicious meeting between Dr. Nene and Organik Kimya’s co-CEO at a 

hotel in Rotterdam. ALJ Order, 2014 WL 5768586, at 

*44. After Dow served Organik Kimya with the complaint 

in this matter, Mr. Kaslowski, Organik Kimya’s co-CEO, 

called Dr. Nene directly and directed him to travel to 

Rotterdam for a “safety audit.” Id. When Dr. Nene 

traveled to Rotterdam about a month later, Mr. Kaslowski 

was the first person to meet with Dr. Nene. They met at 

Dr. Nene’s hotel rather than at Organik Kimya’s offices. 

Id. Both Dr. Nene and Organik Kimya’s co-CEO denied 

having this meeting, but the forensic investigation confirmed that it occurred. Id.

Dr. Nene also admitted that, around the time he received the call from Mr. Kaslowski asking Dr. Nene to 

travel to Rotterdam for the “safety audit,” Dr. Nene 

“removed the hard drive from his personal computer and 

smashed it with a hammer and threw it in the garbage.” 

Id. Dr. Nene testified that he smashed the hard drive to 

make sure that the information on the drive could not be 

recovered. Id. at *25. He also admitted to destroying a 

bag full of zip drives. Id. The ALJ found this evidence 

“very significant, as well as extremely troubling, as it 

shows not only joint purpose, but tends to establish Dr. 

Nene and Mr. Kaslowski recognized the obvious implication that such a meeting would have since it occurred 

shortly after this investigation commenced.” Id. at *44. 

The ALJ also determined that “it seems unlikely the coCEO of Organik Kimya would participate in a routine 

safety audit and meet in a hotel to discuss it and then lie 

about the meeting afterwards.” Id.

The ALJ found sufficient evidence to conclude that 

Organik Kimya had the ability to control Dr. Nene and 

had failed to act responsibly to preserve Dr. Nene’s information, thereby rendering Organik Kimya in reckless 

disregard of its duty to preserve Dr. Nene’s information. 

Id. at *57. But the ALJ determined that there was insufCase: 15-1774 Document: 99-2 Page: 6 Filed: 02/15/2017
ORGANIK KIMYA v. ITC 7

ficient evidence to link Dr. Nene’s deletion of evidence to a 

design by Organik Kimya to destroy the data deliberately. 

Id. The ALJ accordingly found “no sanction-worth[y] 

spoliation” relating to Dr. Nene’s documents. Id. at *65. 

3. Findings Relating to Strozzi

On March 21, 2014, one day after the ALJ ordered 

Strozzi’s files to be preserved and four days prior to the 

scheduled forensic examination of Strozzi’s computer, 

someone logged into the computer and deleted 2,742 usercreated files and folders, many of which were later recovered and found to be responsive to previously identified

keyword search terms. Id. at *20–21. The inspectors also 

found evidence of numerous undisclosed and unproduced 

USB storage devices used on Strozzi’s work computer. Id.

at *21. But before Dow learned about the existence of the 

external storage devices, Strozzi took his computer bag, 

which had his computer and storage devices, “into a 

bathroom of a highway rest stop, but ‘accidentally’ left [it]

there.” Id.

The ALJ found that Organik Kimya had control over

Strozzi’s laptop but not the external storage devices. Id.

at *54. The ALJ also found that Organik Kimya had 

never given its employees a litigation hold notice, instead 

leaving it up to each individual employee whether to save 

or delete electronic files. Id. at *56. Although the evidence from Strozzi’s laptop was later recovered through 

forensic investigation, the ALJ determined that the 

deletion of the files “evinces an attempt to cover-up wrong 

doing. What is even more shocking is that at the time I 

issued my Preservation Order, Organik Kimya was already on notice of the massive spoliation of evidence on 

Dr. Perez’s laptop.” Id. at *56. The ALJ noted that “[t]he 

matter is even worse when discussing the loss of the 

laptop itself, for Organik Kimya had the laptop in its 

possession for the forensic inspection and yet inexplicably 

returned it to Strozzi, which allowed him to ‘lose’ it.” Id.

Case: 15-1774 Document: 99-2 Page: 7 Filed: 02/15/2017
8 ORGANIK KIMYA v. ITC

at *57. Additionally, Dow only received a small portion of 

the deleted documents because only a few were responsive 

to the search terms the parties identified prior to the 

forensic search. Id. at *63. The ALJ noted, however, that 

many of the additional files for which Dow received the 

file name but never saw the full document seemed plainly 

relevant to the case based on the file names, whether or 

not associated with the identified search terms. Id. The 

ALJ determined that Organik Kimya failed to show that 

these documents were neither relevant nor prejudicial. 

Id.

As to Organik Kimya’s conduct relating to Strozzi’s 

laptop, the ALJ found “the spoliation of evidence on the 

Strozzi laptop and the spoliation of the Strozzi laptop 

itself was done in an effort to prevent Dow from access to 

evidence it might use to support its allegations in this 

investigation.” Id. at *57. The ALJ concluded that “the 

spoliation of evidence on the Strozzi laptop and the loss of 

the Strozzi laptop itself was in bad faith.” Id. The ALJ 

also found “at least some of the documents deleted from 

the Strozzi laptop to be relevant and prejudicial to Dow’s 

allegations in this investigation.” Id. at *63.

4. The ALJ’s Conclusions

On May 19, 2014, Dow moved for sanctions, including 

a default judgment against Organik Kimya. Id. at *2. 

Two days later, Organik Kimya filed a motion to terminate the investigation by consent order. Id. at *66 n.19. 

Organik Kimya “agreed to completely and indefinitely 

withdraw the accused products from the U.S. market.” 

J.A. 9142. Organik Kimya admitted that “a portion of the 

hard drive of Mr. Perez’s computer was overwritten in 

such a way that previously deleted files were potentially 

rendered unrecoverable through forensic means.” ALJ 

Order, 2014 WL 5768586, at *29. Nevertheless, Organik 

Kimya urged the ALJ to enter its proposed consent order 

rather than a default judgment.

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ORGANIK KIMYA v. ITC 9

The ALJ conducted a two-day hearing on Dow’s sanction motion and Organik Kimya’s consent order motion. 

At the hearing, Organik Kimya also argued in the alternative that any sanction be limited to an adverse inference precluding Dr. Perez from testifying about Organik 

Kimya’s alleged independent development of its opaque 

polymers. J.A. 11509 at 399:24–400:14. The ALJ granted 

Dow’s motion for default judgment in a 119-page initial 

determination. See generally ALJ Order, 2014 WL 

5768586. The opinion recounted Organik Kimya’s destruction of evidence in detail. It included the following 

excerpt as part of its Executive Summary: 

[A]s will be made clear in the pages that follow 

this is an extreme case, for Organik Kimya flouted 

its obligation to preserve evidence, deliberately 

destroyed evidence, and then actively attempted 

to deceive the undersigned as to what it had done. 

Given: (1) the grave damage Organik Kimya’s deliberate conduct potentially could have on the administration of justice; (2) the need to deter such 

egregious conduct in the future; and (3) the certain prejudice to Dow, only the strongest remedy 

available is sufficient.

Id. at *2. 

When discussing a sanction, the ALJ stated that Organik Kimya’s “willful, bad faith misconduct” had deprived Dow of its ability to pursue its trade secret 

misappropriation claim effectively and the ALJ of his 

“ability to oversee a prehearing process that would facilitate a fair and timely resolution of this investigation on 

its merits.” Id. at *65. The ALJ therefore found that “[n]o 

sanction short of default is available to return the parties 

to the position in which they would have been but for the 

deliberate destruction by Organik Kimya of evidence 

potentially favorable to Dow.” Id. The ALJ then explained why shifting the burden of proof and using adCase: 15-1774 Document: 99-2 Page: 9 Filed: 02/15/2017
10 ORGANIK KIMYA v. ITC

verse inferences would not address adequately Organik 

Kimya’s conduct in this case. Id. at *66. According to the 

ALJ, “no lesser sanction will adequately deter the repetition of this kind of easily accomplished and highly prejudicial destruction of evidence.” Id.

The ALJ further clarified that he found “Organik 

Kimya’s abhorrent conduct” with regard to Dr. Perez’s 

laptop and files to be “more than sufficient to justify the 

Default Sanction against Organik Kimya.” Id. at *76. He 

found “Organik Kimya’s contumacious and inexplicable 

conduct” with regard to Strozzi and his documents “to 

independently justify the most severe sanction, even were 

I to heed Organik Kimya’s lack of prejudice argument.” 

Id.

B. The Commission Affirms the ALJ’s Conclusions

The Commission determined that the initial determination “recites in detail the discovery-related misconduct 

in this investigation,” and the Commission affirmed and 

adopted all of the initial determination’s factual findings. 

Commission Opinion, at 6. The Commission also “affirm[ed] and adopt[ed] the ALJ’s determination of default.” Id.; see also id. at 12 (“We affirm all of the [initial 

determination’s] findings concerning the default sanction.”). The Commission determined that the spoliation of 

evidence on Dr. Perez’s computer “alone is more than 

sufficient to justify the sanctions ordered by the ALJ.” Id.

at 13. It went on to find that the intentional deletion of 

files by Strozzi “is at least circumstantial evidence relating to the culpable state of mind found by the ALJ.” Id. at 

14.

Organik Kimya argued that the ALJ failed to consider

its proposed lesser sanctions. See id. at 14–17. The 

Commission rejected Organik Kimya’s argument as to the 

consent order, noting that “[t]he Commission has always 

reserved the right to deny termination by consent in 

appropriate circumstance.” Id. at 15. The Commission 

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ORGANIK KIMYA v. ITC 11

also noted that “allowing Organik Kimya to exit the 

investigation on consent ‘without accepting the full measure of its responsibility for its egregious actions’ would not 

be a sufficient deterrent” because, “[i]f such termination 

were allowed here, future parties may decide to engage in 

discovery abuse with the understanding that if they are 

caught they can merely exit the investigation through the 

consent order procedures without being held accountable 

for their misconduct.” Id. at 15–16. As to an adverse 

inference or some lesser sanction, the Commission stated

that “[t]he ALJ also explained why any sanction less than 

default would be insufficient” and that the Commission 

could “discern no conflict between the ALJ’s determination and Shepherd [v. American Broadcasting Cos., 62 

F.3d 1469 (D.C. Cir. 1995)],” which Organik Kimya had 

cited in support for its argument. Commission Opinion, 

at 17.

The Commission found that an exclusion order and a 

cease and desist order were appropriate remedies. Id. at 

21. Based on the record evidence, the Commission determined that the evidence demonstrated it would have 

taken Organik Kimya 25 years to develop a commercial 

opaque polymer comparable to Dow’s without using Dow’s 

trade secrets. Id. The Commission therefore found that a 

25-year period would be an appropriate length for the 

exclusion order. Id. The exclusion order included a 

narrowing provision, however, that allows Organik Kimya 

to seek an opinion from the Commission that would allow 

Organik Kimya to import products that it shows were 

developed without using Dow’s misappropriated trade 

secrets. Id. at 23–24.

II. DISCUSSION

A. Default Judgment Sanction

Any sanctions imposed by the Commission are reviewed for an abuse of discretion. Genentech, Inc. v. U.S. 

Int’l Trade Comm’n, 122 F.3d 1409, 1414 (Fed. Cir. 1997). 

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12 ORGANIK KIMYA v. ITC

An abuse of discretion occurs if “the Commission’s sanction decision (1) is clearly unreasonable, arbitrary, or 

fanciful; (2) is based on an erroneous conclusion of law; 

(3) rests on clearly erroneous fact findings; or (4) follows 

from a record that contains no evidence on which the 

decision-making body could rationally base its decision.” 

Id. at 1415.

The parties initially dispute the proper standard for 

reviewing the Commission’s decision to impose default 

judgment sanctions against Organik Kimya. The ITC and 

Dow argue that we need only look to 19 C.F.R. § 210.33(b) 

and Federal Rule of Civil Procedure 37(b) in our review of 

the sanctions. Under 19 C.F.R. § 210.33(b), the ALJ in an 

ITC investigation has the authority to issue non-monetary 

sanctions for failure to comply with an order compelling 

discovery. The list of possible sanctions includes “any 

other non-monetary sanction available under Rule 37(b) 

of the Federal Rules of Civil Procedure.” 19 C.F.R. 

§ 210.33(b)(6). Rule 37(b) states that a court may “render[] a default judgment against the disobedient party” if 

the party fails to obey a discovery order. Fed. R. Civ. P. 

37(b)(2)(A)(vi). Because Organik Kimya disobeyed the 

ALJ’s express discovery orders through its spoliation of 

evidence, the ITC and Dow argue that 19 C.F.R. 

§ 210.33(b) and Rule 37(b) support affirmance of the 

default judgment sanction.

Organik Kimya argues that the discussion of default 

judgment sanctions in Micron Technology, Inc. v. Rambus 

Inc., 645 F.3d 1311 (Fed. Cir. 2011), controls our decision. 

In Micron, we addressed a default judgment sanction

imposed by a district court under its inherent authority to 

control litigation and the judicial process. Id. at 1326. In 

reviewing the district court’s decision, we analyzed the 

district court’s findings with respect to: (1) bad faith, 

(2) prejudice to the opposing party caused by the spoliation, and (3) availability or efficacy of lesser sanctions. Id.

at 1326–29. Organik Kimya does not challenge the findCase: 15-1774 Document: 99-2 Page: 12 Filed: 02/15/2017
ORGANIK KIMYA v. ITC 13

ing of bad faith in this case, but it argues that the Commission erred under Micron because the degree of prejudice to Dow was minimal and the Commission did not 

adequately address the efficacy of lesser sanctions.

We agree with the ITC and Dow that we should consider the sanctions in this case under the standard of 19 

C.F.R. § 210.33(b) and Rule 37(b), because the ALJ and 

the Commission based their decisions on Organik Kimya’s 

express disobedience of the ALJ’s discovery orders. See

ALJ Order, 2014 WL 5768586, at *4 n.2 (explaining that 

the ALJ used 19 C.F.R. § 210.33(b) and Rule 37, not his 

inherent authority—to the extent he has such authority—

to sanction Organik Kimya); see also Commission Opinion, at 12–14 (affirming the ALJ’s findings). The ALJ 

explicitly ordered the forensic inspection of Dr. Perez’s 

computer. ALJ Order, 2014 WL 5768586, at *15. After 

allegations arose that Dow was unable to procure certain 

discovery from Organik Kimya because documents and 

files had been destroyed, the ALJ ordered Organik Kimya

to preserve its documents and even warned that he would 

be “mortally annoyed if anything was done to alter, destroy or otherwise mess with the evidence in this case.” 

Id. at *18. Organik Kimya’s destruction of thousands of 

documents, despite the ALJ’s explicit orders to conserve 

the documents, brings this case under the purview of 19 

C.F.R. § 210.33(b) and Rule 37(b).

As explained above, 19 C.F.R. § 210.33(b) states that 

an ALJ may order any non-monetary sanction available 

under Rule 37(b) that is not already included in 

§ 210.33(b). Rule 37 permits a court to render a default 

judgment against a party that fails to obey an order to 

provide or permit discovery. Fed. R. Civ. P. 

37(b)(2)(A)(vi); see also Shepherd, 62 F.3d at 1480 (acknowledging that Rule 37(b) “expressly authorizes dismissal or default for noncompliance with a discovery 

order”); Everyday Learning Corp. v. Larson, 242 F.3d 815, 

817–18 (8th Cir. 2001) (“When the facts show willfulness 

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14 ORGANIK KIMYA v. ITC

and bad faith, as in this case, the district court need not 

investigate the propriety of a less extreme sanction. In 

such cases, the ‘selection of a proper sanction, including 

dismissal, is entrusted to the sound discretion of the 

district court.’” (quoting Avionic Co. v. Gen. Dynamics 

Corp., 957 F.2d 555, 558 (8th Cir. 1992))). Although the 

entry of a default judgment for failure to comply with a 

discovery sanction may seem harsh, the Supreme Court 

has explained that the most severe sanctions must be 

available to district courts in appropriate cases:

There is a natural tendency on the part of reviewing courts, properly employing the benefit of hindsight, to be heavily influenced by the severity of 

outright dismissal as a sanction for failure to 

comply with a discovery order. It is quite reasonable to conclude that a party who has been subjected to such an order will feel duly chastened, so 

that even though he succeeds in having the order 

reversed on appeal he will nonetheless comply 

promptly with future discovery orders of the district court. 

But here, as in other areas of the law, the most 

severe in the spectrum of sanctions provided by 

statute or rule must be available to the district 

court in appropriate cases, not merely to penalize 

those whose conduct may be deemed to warrant 

such a sanction, but to deter those who might be 

tempted to such conduct in the absence of such a 

deterrent.

Nat’l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 

639, 642–43 (1976).

Despite these authorities, Organik Kimya argues that 

19 C.F.R. § 210.33 effectively mirrors the inherent authority standard discussed in Micron, rather than the Rule 37 

standard, because it states that the ALJ can grant relief 

“as may be sufficient to compensate for the lack of withCase: 15-1774 Document: 99-2 Page: 14 Filed: 02/15/2017
ORGANIK KIMYA v. ITC 15

held testimony, documents, or other evidence.” 19 C.F.R. 

§ 210.33(b)(6). But we have stated previously that 

§ 210.33(b) is “coextensive” with Rule 37. Genentech, 122 

F.3d at 1418. We further explained that the “only difference between [§ 210.33] and Rule 37, as construed by the 

Commission, is that [§ 210.33] does not provide authority 

to award reasonable expenses and attorney fees as a 

sanction for cases instituted before August 31, 1994.”3 Id.

at 1418 n.9; see also Final Rules for Investigations and 

Related Proceedings Concerning Unfair Practices in 

Import Trade, 59 Fed. Reg. 39,020 (Aug. 1, 1994) (noting 

that § 210.33(b) was based on Rule 37(b)).

The Commission therefore can issue default judgment 

sanctions in appropriate cases when a party disobeys a 

discovery order if the Commission determines that the 

conduct at issue warrants such sanctions. This does not 

mean that a party’s failure to comply with a discovery 

order will warrant imposing default judgment sanctions

in every case; instead, such sanctions can be imposed in 

appropriate cases “to penalize those whose conduct may 

be deemed to warrant such a sanction” and “to deter those 

who might be tempted to such conduct in the absence of 

such a deterrent.” Nat’l Hockey League, 427 U.S. at 643. 

We leave the determination of such cases to the sound 

discretion of the ALJ and the Commission, whose deci-

 

3 Genentech refers to 19 C.F.R. § 210.36(b) instead 

of § 210.33(b) because the interim rule was found at 

§ 210.36(b). See Interim Rules Governing Investigations 

and Enforcement Procedures Pertaining to Unfair Practices in Import Trade, 53 Fed. Reg. 33,043 (Aug. 29, 1988). 

In 1994, the rule was moved to § 210.33(b) as part of the 

final rules. See Final Rules for Investigations and Related 

Proceedings Concerning Unfair Practices in Import Trade, 

59 Fed. Reg. 39,020 (Aug. 1, 1994).

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16 ORGANIK KIMYA v. ITC

sions we review for an abuse of discretion. See Genentech, 

122 F.3d at 1414. 

The ALJ in this case made extensive findings regarding Organik Kimya’s spoliation of evidence on multiple 

occasions despite explicit orders from the ALJ to preserve 

the evidence. The facts of this case were so extreme that 

they led the ALJ to explain, “were there such a thing, I 

would find Organik Kimya’s egregious behavior to be 

gross bad faith.” ALJ Order, 2014 WL 5768586, at *54. 

Organik Kimya compounded its actions when it “actively 

attempted to deceive the [ALJ] as to what it had done.” 

Id. at *2. The Commission, in reviewing the ALJ’s decision, stated that it “affirm[ed] and adopt[ed]” all of the 

ALJ’s factual findings and his determination of default. 

Commission Opinion, at 6. The Commission did not 

abuse its discretion in implementing default judgment 

sanctions because Organik Kimya destroyed “potentially 

hundreds of thousands of files,” ALJ Order, 2014 WL 

5768586, at *66, despite explicit orders from the ALJ to 

preserve documents and then tried to deceive the ALJ as 

to its actions.4 Indeed, these facts put this case squarely 

 

4 Even if we were to analyze this case under Micron, the result would be the same. Organik Kimya did 

not contest the finding that it acted in bad faith. The 

degree of prejudice to Dow was high. The ALJ and the 

Commission, which adopted the ALJ’s findings, found 

that Organik Kimya destroyed “potentially hundreds of 

thousands of files,” ALJ Order, 2014 WL 5768586, at *66, 

making it “impossible to know the exact volume and 

content of the destroyed data,” Commission Opinion, at 

17. This “willful, bad faith misconduct” deprived Dow of 

“its ability to pursue its claim of trade secret misappropriation” and deprived the ALJ of his “ability to oversee a 

prehearing process that would facilitate a fair and timely 

resolution of this investigation on its merits.” ALJ Order, 

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ORGANIK KIMYA v. ITC 17

within the Supreme Court’s admonition that “the most 

severe in the spectrum of sanctions provided by statute or 

rule must be available to the district court in appropriate 

cases” to penalize a party’s sanctionable conduct and to 

deter future parties from repeating such conduct. Nat’l 

Hockey League, 427 U.S. at 643.

B. The Limited Exclusion Order

If a party is found in default, the Commission can implement relief against the party in default upon the 

motion of the complainant. 19 C.F.R. § 210.16(c)(1); see 

also 19 C.F.R. § 210.16(a)(2) (specifying that this section 

applies to parties found in default under § 210.33(b) for 

failure to make or cooperate in discovery). The Commission will presume the facts alleged in the complaint to be 

true, and the Commission may issue an exclusion order, a 

cease and desist order, or both. Id. § 210.16(c)(1). This is 

consistent with 19 U.S.C. § 1337, which states that the 

Commission shall enter a limited exclusion order if it 

determines that a violation of § 1337 has occurred and 

public interest factors do not counsel against its issuance. 

19 U.S.C. § 1337(d)(1); see also Spansion, Inc. v. U.S. Int’l 

Trade Comm’n, 629 F.3d 1331, 1358 (Fed. Cir. 2010) (“By 

statute, the Commission is required to issue an exclusion 

order upon the finding of a Section 337 violation absent a 

 

2014 WL 5768586, at *65. The Commission determined 

that the lesser sanctions Organik Kimya sought were 

inadequate. Commission Opinion, at 15–16. The Commission also reviewed and adopted the ALJ’s findings, 

which included the determination that “no lesser sanction 

will adequately deter the repetition of this kind of easily 

accomplished and highly prejudicial destruction of evidence.” ALJ Order, 2014 WL 5768586, at *66. The Commission accordingly did not abuse its discretion under 

Micron. 

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18 ORGANIK KIMYA v. ITC

finding that the effects of one of the statutorilyenumerated public interest factors counsel otherwise.”).

“[T]he Commission has broad discretion in selecting 

the form, scope, and extent of the remedy” after finding a 

violation of 19 U.S.C. § 1337. Hyundai Elecs. Indus. Co. 

v. U.S. Int’l Trade Comm’n, 899 F.2d 1204, 1209 (Fed. Cir. 

1990) (quoting Viscofan, S.A. v. U.S. Int’l Trade Comm’n, 

787 F.2d 544, 548 (Fed. Cir. 1986)). We can set aside the 

Commission’s choice of remedy “only if it is legally erroneous, arbitrary and capricious, or constitutes an abuse of 

discretion.” Fuji Photo Film Co. v. U.S. Int’l Trade 

Comm’n, 386 F.3d 1095, 1106 (Fed. Cir. 2004).

After finding Organik Kimya in default and in violation of § 1337, the Commission determined that a limited 

exclusion order against Organik Kimya and a cease and 

desist order against Organik Kimya’s U.S. subsidiary

were appropriate. Commission Opinion, at 21. Based on 

the facts in the record, the Commission found 25 years, 

the length sought by Dow and supported by Dow’s expert,

to be the proper length for the limited exclusion order and 

the cease and desist order. Id. The Commission, however, expressly allowed Organik Kimya to bypass the limited exclusion order and import products using opaque 

polymers into the United States prior to the completion of 

the 25-year period as long as Organik Kimya shows the 

Commission that it has developed its opaque polymers 

without the use of Dow’s misappropriated trade secrets. 

Id. at 23.

On appeal, Organik Kimya does not challenge the 

cease and desist order; Organik Kimya only challenges 

the limited exclusion order, alleging that the Commission 

committed legal error by failing to consider Organik 

Kimya’s arguments regarding the proper remedy, including its challenge to the 25-year term. The Commission

considered Organik Kimya’s briefing, however, and determined that its arguments as to the scope of the excluCase: 15-1774 Document: 99-2 Page: 18 Filed: 02/15/2017
ORGANIK KIMYA v. ITC 19

sion order relied entirely on arguments regarding the 

merits of the trade secret allegations. Id. at 19–20. 

Because Organik Kimya defaulted on those claims due to 

the discovery sanctions imposed, the Commission determined that Organik Kimya could not relitigate the underlying merits of the trade secret claims by collaterally

attacking the merits in its remedy briefing. Id. at 20.

The Commission also found Dow’s expert credible 

when he opined that it would take Organik Kimya 15 to 

25 years to develop opaque polymers independently. Id.

at 21. Dow’s expert explained the basis for his calculation 

and supported his opinion with extensive facts from the 

record. The Commission, in its discretion, found 25 years 

to be the proper length for the exclusion order, and that 

decision finds ample support in the record. Given this 

basis for the Commission’s decision, and that Organik 

Kimya can end the exclusion order period at any time by 

seeking an advisory opinion or initiating a modification 

proceeding before the Commission and showing that 

Organik Kimya has produced opaque polymers independently, we do not find that the Commission abused its 

discretion or committed legal error in this case.

In an attempt to rebut the Commission’s decision to 

impose a 25-year exclusion order in this case, Organik 

Kimya points to various cases to support its assertion that 

exclusion orders in trade secret misappropriation cases 

typically last five to ten years. As Organik Kimya itself 

recognizes, however, the Commission bases the time 

period of a limited exclusion order on a “reasonable research and development period” or an “independent 

development time” for the trade secrets at issue. Certain 

Cast Steel Ry. Wheels, Certain Processes for Mfg. or Relating to Same & Certain Prods. Containing Same, USITC 

Inv. No. 337-TA-655, 2009 ITC LEXIS 2387, at *11 (Oct. 

29, 2009)). The length of the exclusion order therefore 

depends on the trade secrets at issue and evidence in the 

record, not the particular length of exclusion orders in 

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20 ORGANIK KIMYA v. ITC

other cases. See id. As discussed above, the record in this 

case supports the limited exclusion order imposed by the 

Commission.

Organik Kimya also attempts to find fault with the 

Commission’s citation of 19 U.S.C. § 1337(g). According to 

Organik Kimya, the Commission relied on § 1337(g), 

which relates to parties that fail to respond to a complaint, as a basis for refusing to consider Organik Kimya’s 

arguments regarding the proper remedy. The Commission’s opinion confutes this argument. The Commission 

first used § 1337(g) as support for presuming that the 

allegations of Dow’s amended complaint were true based 

upon Organik Kimya’s default. Commission Opinion, at 

19. This use of § 1337(g) comports with 19 C.F.R. 

§ 210.16(c)(1) and is not legally erroneous. The Commission then used § 1337(g) merely as support for its assertion that Congress has spoken to the existence of remedial 

orders in default cases. Commission Opinion, at 22. 

These uses of § 1337(g) in the Commission opinion do not 

amount to legal error; indeed, the Commission does not 

even use the citations in the manner Organik Kimya

claims. 

The record in this case supports the Commission’s 

limited exclusion order of 25 years with the opportunity 

for Organik Kimya to bypass the exclusion order period at 

any time if it can show that it has developed its opaque 

polymers without using Dow’s misappropriated trade 

secrets.

III. CONCLUSION

We have considered Organik Kimya’s remaining arguments and find them unpersuasive. For the foregoing 

reasons, the decision of the Commission is affirmed.

AFFIRMED

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ORGANIK KIMYA v. ITC 21

COSTS

Costs to Appellee. 

Case: 15-1774 Document: 99-2 Page: 21 Filed: 02/15/2017