# In the United States Court of Federal Claims

No. 11-236C

(Filed: January 29, 2016)

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Patent Infringement Case; Rule 54 Motion for Reconsideration; Failure to Respond to Discovery Requests;
Dismissal of Trade Secret Claims as
Sanction Under Rule 37. * DEMODULATION, INC., *
* Plaintiff, *
*
v. *
* THE UNITED STATES, *
*
Defendant. *
*

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Keith A. McKenna , The McKenna Law Firm LLC, Mont clair, New Jersey, for Plaintiff.

Gary L. Hausken , with whom were Benjamin C. Mizer , Principal Deputy Assistant Attorney General, John Fargo , Director, and Alice Suh Jou , Of Counsel, Commercial Litigation Branch, Civil Divisi on, U.S. Department of Justice, Washington, D.C., for
Defendant.

ORDER ON PLAINTIFF’S MOTION FOR RECONSIDERATION OF THE COURT’S AUGUST 13, 2015 ORDER

WHEELER, Judge.

On December 8, 2015, counsel for Plain tiff Demodulation, Inc. (“Demodulation”)
filed a motion for reconsideration of the Cour t’s August 13, 2015 Order, Dkt. No. 166, dismissing all of Plaintiff’s trade secret claims as contained in Counts One, Two, Four, and
Five of Plaintiff’s Third Amende d Complaint. Pl.’s Mot. at 1. 1 Pursuant to Rule 37, the
Court dismissed Plaintiff’s trade secret claims with prejudice for fa ilure to assert or describe the claims with any meaningful deta il despite being ordered to do so by the Court
no fewer than three times.

1 Plaintiff does not seek reconsideration of the mone tary sanctions entered against Benjamin D. Light, Plaintiff’s former counsel of record, and hi s former law firm, Callagy Law, P.C.2 1. Factual and Procedural History

Concerns with Plaintiff’s description of its trade secrets claims arose well over a year ago. After Demodulation produced just one page of responsive material and failed to identify its trade secret claims in response to the Governme nt’s discovery requests, the Government filed a Motion to Compel Answer s on October 31, 2014. Dkt. No. 74. When the deadline passed with no response, the Government filed its Motion to Enter Order Compelling Discovery and to Show Cause. Dkt. No. 77. The Court granted the Government’s Motion to Compel and orde red Demodulation to furnish a complete response to the Government’s First Set of In terrogatories and Firs t Set of Requests for Production no later than January 5, 2015. Dkt. No. 79. A dditionally, the Court ordered Demodulation to show cause why it should not be sanctioned. Id. On January 5, 2015, then counsel of record for Demodulation, Mr. Benjamin D. Light, filed a declaration explaining why neither he nor Demodulation should be sanc tioned. Dkt. No. 81. Mr. Light’s declaration notwithstanding, Demodulati on had yet to respond to the Government’s discovery requests and thus the Court or dered Demodulation to submit supplemental discovery responses and to furnish all responsive documen ts by February 11, 2015. Dkt.

No. 83.

Despite multiple orders from this Court to furnish complete discovery responses, Demodulation’s supplemental responses fa iled to remedy its incomplete document production and incomplete answer s to the Government’s interro gatories. In response to these inadequacies, the Government filed its Renewed Motion to Compel Discovery and for Sanctions. Dkt. No. 91. On August 13, 2015, the Court issued an order dismissing
Plaintiff’s trade secret claims. As the Court explained, “[d]is missal of all the trade secret claims is entirely warranted he re. . . . Demodulation was give n multiple chances to correct and amend its responses, and its conduct was no t merely the product of a misunderstanding
of the Court’s orders.” Dkt. No. 166 at 9.

2. Standard of Review

The decision of whether to grant a motion fo r reconsideration is squarely within the discretion of the trial court. Under Rule 54( b), the Court can revise “any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the pa rties [that] does not end the ac tion as to any of the claims or parties” prior to entry of a judgment adjudi cating all claims. Reconsideration under Rule 54 is “available ‘as justice requires.’” Ma rtin v. United States, 101 Fed. Cl. 664, 671 (2011). Although th e standard for reconsideration is imprecise and affords discretion to the trial court, “reconsideration is ‘not intended . . . to give an unhappy litigant an additional chance to sway’ the court.” Id. (quoting Ma tthews v. United States, 73 Fed. Cl. 524, 525 (2006)). Instead, such a motion should only be granted up on the showing of “exceptional circumstances justifying relief, based on manifest error of law or mistake in fact. . . .” Webster v. United States, 93 Fed. Cl. 676, 679 (2010) (citing Hender son Cty. Drainage3 Dist. No. 3 v. United States, 54 Fed. Cl. 334 , 337 (2003)). Exceptional circumstances include: (1) an intervening ch ange in the controlling law; (2 ) availability of previously unavailable evidence; or (3) preventing manife st injustice. Shirlington Limousine & Transp., Inc. v. United States, 78 Fed. Cl. 27, 29 (2007). To prevail, a party seeking reconsideration based upon “m anifest injustice” must demons trate that the injustice is “apparent to the point of being almost indisp utable.” Webster, 93 Fed. Cl. at 679 (quoting
Pac. Gas & Elec. V. United Stat es, 74 Fed. Cl. 779, 785 (2006)).

3. Analysis

Claim dismissal by a trial court pursuant to Rule 37 generally requires advance warning from the court and a showing of more than mere negligen ce on the part of the sanctioned party. See Ingalls Shipbuilding, Inc. v. United States, 857 F.2d 1448, 1451 (Fed. Cir. 1988) (“A party’s simple ignor ance, grounded in confusion or sincere misunderstanding of the Court’s orders, does not warrant dismi ssal.”) (internal citations omitted). Dismissal is appropriate when the court expressly highlight s the inadeq uacy of discovery responses and warns the responding party that it may be subject to sanctions. R.W. Int’l Corp. v. Welch Food s, Inc., 937 F.2d 11, 15 (1st Cir. 1991); see Wexell v. Komar Indus., 18 F.3d 916, 920 (Fed . Cir. 1994) (finding that di smissal was an appropriate sanction where the plaintiff willfully disobeye d the court’s order to provide responses to initial discovery requests, was warned of th e consequences of failing to respond, and caused prejudice to the defendant); see also Re fac Int’l v. Hitachi, Ltd., 921 F.2d 1247, 1255-56 (Fed. Cir. 1990) (affirming trial court’ s dismissal of plaintiff’s suit and sanctions for failure to provide adequate supplemental responses to initial inadequate discovery responses despite the court’s order).

In seeking reconsideration of the Co urt’s August 13, 2015 Order, Demodulation claims that it “took all steps it could have taken at that time [when the claims were dismissed] to comply” w ith the trade secrets discovery requests and orders. Pl.’s Mot. 4. Additionally, Demodulation claims that it “was not aware that the Court also believed the supplemental answers to be in adequate” and that it “was not on notice of the possibility of the imposition of any sanctions. . . .” Id. at 7. Finally, Dem odulation highlights the monetary sanctions the Court imposed on its prior counsel to argue that “the additional sanction of dismissal with prejudice of the Trade Secret Claims was in error given the availability of the lesser sanctions and the mani fest injustice that re sulted.” Id. at 4. Plaintiff’s arguments misconstrue the proce dural history of this litigation and contain factual assertions that are patently false.

As this Court already has explained, the st eps Plaintiff had taken to comply with the discovery requests when the claims were dism issed were so grossly inadequate that the
Court determined Plaintiff had no trade secret s to protect and “that it would be unfair to the Government to allow such claims to go forward.” Dkt. No . 166 at 9. Although
Demodulation now seeks to shift responsibility for its failure to articulate its claims to its4 prior counsel, Demodulation is the party asserti ng the trade secret claims in this matter and
it should have been able to come forward with a comprehensible description of those claims in a timely fashion. It failed to do so. Afte r first offering evasive boilerplate responses to the Government’s interrogatories, Demodulati on then submitted a response indicating the
Government could find its trade secrets some where among 2,360 page s of partly illegible documents it had produced. Id. at 9. The “Claim Chart” included as an appendix to Plaintiff’s Reply to Opposition to Motion for Reconsideration, filed on January 7, 2016, is too little, too late. Reply, App’x 1. “At the ve ry least, a defendant is entitled to know the bases for plaintiff’s charges ag ainst it. The burden is upon th e plaintiff to specify those charges, not upon the defendant to guess wh at they are.” Xerox Corp. v. Int’l Bus. Machines Corp., 64 F.R.D. 36 7, 371 (S.D.N.Y. 1974). Plaintiff’s ongoing refusal to specify its trade secret appr opriation charges has caused prejudice to the Government. Without knowledge of Demodula tion’s trade secrets, the Government has been unable to determine whether any of those secrets were misappropriated, and thus has not been able to develop its defense.

The record does not support Plaintiff’s cl aims of being unaware that the Court considered its discovery responses inadequate or that dismissal of it s trade secrets claims was a possibility. After multiple Governme nt motions and Cour t orders requesting
identification of Plaintiff’s tr ade secret claims failed to e licit an adequate response from Plaintiff, the Court held a status conference on April 2, 2015. During this conference, the Court repeatedly asked Plaintiff’s counsel to describe the claims , to no avail. Dkt. No. 110. At that time, there was already a motion pending from the Government seeking partial
dismissal of Plaintiff’s claims as a sanction. On the record, the Court expressly stated that the Government’s motion for sanctions was fully briefed and the Court would be ruling on it in short order. Id. Thus, Plaintiff’s claims that it was unaware that the Court considered its discovery responses inadequate and that it had no warning regard ing the possibility of sanctions are simply untenable, if not disingenuous.

4. Conclusion

Demodulation had notice that the Cour t considered its responses to the Government’s discovery request s regarding its trade secret claims inadequate. Further, Demodulation was given multiple op portunities to address this inadequacy. It failed to do so, even when facing a clear possibility of sanc tions by this Court. Demodulation’s refusal to cooperate has frustrated the Governme nt’s ability to litigate this matter. As Demodulation was given fair warning of sanc tions and multiple oppor tunities to respond to the Government in a satisfactory manner, it was well within the discretion of this Court
to dismiss Demodulation’s trade secret cl aims. Any “injustice” Demodulation now perceives is of its own making. Accordingly, Plaintiff’s mo tion for reconsideration of the portion of this Court’s August 13, 2015 Order dismissing Plain tiff’s trade secret claims is

DENIED.5 IT IS SO ORDERED.

s/Thomas C. Wheeler

THOMAS C. WHEELER Judge