TO BE FILED UNDER SEAL 

IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF TEXAS 

DALLAS DIVISION 

T-NETIX, INC., 

 Plaintiff/Counter-Defendant, 

v. 

VALUE-ADDED 

COMMUNICATIONS, INC. 

 Defendant/Counter-Plaintiff, 

v. 

SECURUS TECHNOLOGIES, INC. 

 Counter-Defendant. 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

 Case No. 3:05-CV-0654-D 

ECF 

 

GRUBER HURST’S POST-HEARING BRIEF 

Gruber Hurst Johansen Hail Shank, LLP (“Gruber Hurst”) files this Post-Hearing Brief 

addressing the post-hearing legal issues identified by the Court. 

I. 

SUMMARY 

 Value-Added Communications, Inc. (“VAC”) wants to have its cake and eat it too. 

During the 2008 contempt proceeding, VAC took the position that Gruber Hurst was not a party 

to the March 3, 2006 Protective Order (“Protective Order”) and, therefore, was not entitled to 

possession of any document protected by the Protective Order. VAC convinced Judge 

Sanderson of the same who, as a result, gave Gruber Hurst the option of returning the protected 

documents or entering an appearance as counsel of record – thereby becoming subject to the 

Protective Order. While Gruber Hurst never represented to Judge Sanderson which option it 

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decided to take, Gruber Hurst did later return physical copies of the protected documents, 

including the McAlexander Rebuttal Report (the “Report”), and destroyed electronic versions of 

the same, thereby going above and beyond what Judge Sanderson actually requested. Gruber 

Hurst never entered an appearance as counsel of record. VAC, however, has now sought to hold 

Gruber Hurst in contempt of court for violating the same Protective Order. In a confounding 

twist, VAC still argues that Gruber Hurst is not a party to the Protective Order. As a matter of 

law and logic, both cannot be true. It is uncontested that VAC represented to Judge Sanderson in 

briefing and at the 2008 contempt hearing that Gruber Hurst was not a party to the Protective 

Order and VAC is now estopped from claiming that Gruber Hurst is a party to the Protective 

Order. (2013 Hearing Trans. at 102-103). (Ms. Clouston: “I believe we are bound [to the 

representations about Gruber Hurst not being a party to the Protective Order].”). In fact, were 

Gruber Hurst a party to the Protective Order, Gruber Hurst would be able to retain a copy of the 

Report, which was marked “Counsel’s Eyes Only.” 

VAC also offers no factual basis to assert that Gruber Hurst is in contempt as a non-party 

to the Protective Order. A non-party is only liable for contempt when the non-party “acts with 

the enjoined party.” Whitcraft v. Brown, 570 F.3d 268, 272 (5th Cir. 2009). This requires that 

the non-party “knowingly aids, abets, or conspires with another to evade an injunction or order 

of a court . . . .” Waffenschmidt v. MacKay, 763 F.2d 711, 726 (5th Cir.1985). VAC presented 

no evidence at the hearing to suggest that Gruber Hurst entered into a conspiracy with any party 

to the Protective Order, including T-Netix or Securus, to violate the Protective Order. In reality, 

T-Netix and Securus were totally unaware that Gruber Hurst possessed or produced the Report at 

the time, and it is baffling why they are included in this contempt proceeding at all. Gruber 

Hurst itself only possessed and inadvertently produced the Report as a tiny part of a massive 

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document production that contained over 600,000 electronic pages. The firm also took 

immediate steps to identify and claw back the Report. Such details are important because Gruber 

Hurst cannot be held in contempt based on an aiding and abetting theory if it acted inadvertently 

and in good faith. Whitcraft, 570 F.3d at 272. (Noting that “good faith is relevant to whether a 

non-party knowingly aided or abetted another in violating a court order.”). 

Even putting aside the Protective Order, VAC has no reason or other legal basis upon 

which to bring a contempt charge against Gruber Hurst. The facts simply do not support 

sanctioning Gruber Hurst for being unaware that one document in an electronic folder containing 

600,000 images was subject to the Protective Order. Gruber Hurst was not a party to the 2008 

Hearing, was never ordered to take any certain conduct by Judge Sanderson, and made no 

representation to Judge Sanderson then or later as to what it would do. Gruber Hurst nonetheless 

undertook real and substantial efforts to return and delete documents. In fact, Lisa Miller 

testified that she pulled documents from attorney offices, deleted them from Gruber Hurst’s 

server, and even checked the recycle bins. (2013 Hearing Trans. 225:13-19). 

At the February 25, 2013 hearing the Court also asked Gruber Hurst to brief whether 

there is any other legal basis to sanction Gruber Hurst or hold it in contempt. There is not. 

Judge Fitzwater’s October 31, 2012 Order of Reference notes that VAC’s “application for order 

to show cause” related to whether Gruber Hurst and others “should not be held in contempt for 

violation of the court’s March 3, 2006 protective order,” not any oral directive made by Judge 

Sanderson at the April 16, 2008 hearing. In any event, contempt is only appropriate where “a 

court order was in effect” and “the order required certain conduct.” Piggly Wiggly Clarksville, 

Inc. v. Mrs. Baird’s Bakeries, 177 F.3d 380, 382 (5th Cir. 1999). Judge Sanderson presented 

Gruber Hurst with two options at the hearing, not an order for certain conduct. Even if Judge 

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Sanderson’s options are construed as an order for certain conduct, the evidence at the February 

25, 2013 hearing established that Gruber Hurst substantially complied because the firm took 

every reasonable step to return or delete copies of the Report. 

Equally, there is no basis for sanctions under Rule 11 or the Court’s inherent authority. 

Rule 11 “only applies to the presentation of ‘pleading[s], written motion[s], or other paper[s]’ to 

the court.”). Rogler v. Standard Ins. Co., 30 Fed.Appx. 909, 914, 2002 WL 307731, 4 (10th Cir. 

2002). Even if Rule 11 did apply, it only covers four specific areas of implied representations 

dealing with delay, frivolous arguments, or situations where a party asserts a fact without a 

reasonable belief. (See infra at 18-19). None of these four areas apply here. Rule 11 also 

generally requires that a motion be brought by another party and only after a safe harbor period 

for the opposing party to make amends. Fed. R. Civ. P. 11(c). While a court can issue sanctions 

under Rule 11 without a party motion or safe harbor, this is a limited exception and the available 

sanctions do not include attorney fees or monetary payments to a party. (See infra at 18-19). 

Putting Rule 11 aside, the court’s inherent power to sanction is also inapplicable. Use of 

inherent authority to sanction is discouraged, but this power is limited to situations where there is 

a finding of “bad faith,” and there are no facts to support such a finding in this case. Elliott v. 

Tilton, 64 F.3d 213, 217 (5th Cir. 1995). 

II. 

ARGUMENT 

A. The Court’s First Question: Whether Gruber Hurst Was Subject to the Protective 

Order Such that It Could be Held in Contempt of Court for Violating It? 

1. VAC is Judicially Estopped From Arguing that Gruber Hurst is a Party to the 

Protective Order. 

 VAC takes the contradictory position that Gruber Hurst is not a party to the Protective 

Order – and, therefore, not entitled to possess the Report – yet somehow Gruber Hurst should be 

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held to have violated the Protective Order by possessing the Report. Both cannot be true. 

Moreover, VAC is not free to choose which position it will take. In briefing and at the hearing 

before Judge Sanderson, VAC took the position that Gruber Hurst is not a party to the Protective 

Order and that its possession of documents, including the Report, violated the Protective Order. 

“Judicial estoppel prevents a party from asserting a position in a legal proceeding that is 

contrary to a position previously taken in the same or some earlier proceeding. The purpose of 

the doctrine is to prevent litigants from ‘playing fast and loose’ with the courts.” Hall v. GE 

Plastic Pacific PTE Ltd., 327 F.3d 391, 396 (5th Cir. 2003). For judicial estoppel to apply, a 

party must show that “the position of the party to be estopped is clearly inconsistent with its 

previous one; and second, that party must have convinced the court to accept that previous 

position.” Id. The party’s previous position is broadly construed to include “[s]tatements made 

in a previous suit by an attorney before the court can be imputed to a party and subject to judicial 

estoppel.” Id. (Noting that judicial estoppel can arrive from a party’s “statements to the court in 

the pleadings, [the party’s] own motions, in response to [another party’s] motions, and at the 

pretrial hearing.”). Judicial “acceptance,” meanwhile, does not require a party to prevail on the 

merits but only that a court accept the position as that taken by the party. Hall, 327 F.3d at 399. 

(“The ‘judicial acceptance’ requirement does not mean that the party against whom the judicial 

estoppel doctrine is to be invoked must have prevailed on the merits. Our cases suggest that 

doctrine may be applied whenever a party makes an argument with the explicit intent to 

induce the district court’s reliance.”); see, Everett v. National Union Fire Ins. Co. of Pittsburg, 

P.A., 857 F.Supp.2d 611, 617, n.4 (S.D. Miss. 2012). (Noting that the Fifth Circuit “has also 

held that the judicial estoppel doctrine may be applied whenever a party makes an argument 

‘with the explicit intent to induce the district court’s reliance.’”). 

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 It is uncontroverted that VAC represented to Judge Sanderson in briefing and at the 

hearing that Gruber Hurst was not a party to the Protective Order, and Judge Sanderson relied on 

those representations in giving Gruber Hurst the option of either entering an appearance as 

counsel in the VAC case or returning the documents. He also relied on those representations in 

his Report and Recommendation. (February 25, 2013 Hearing Exhibit 3 at 7-8) (finding that 

Gruber Hurst was not counsel under the Protective Order). When questioned by this Court at the 

February 25, 2013 Show Cause hearing on the issue, VAC’s former counsel and witness, 

Stephanie Clouston, reached the same conclusion – “I believe we are bound [to the 

representations about Gruber Hurst not being a party to the Protective Order].” (2013 Hearing 

Trans at 102-103). Ms. Clouston testified to the same on cross examination: 

Q. So you’re telling the court that basically Gruber Hurst is not a party to the 

protective order, right? 

A. Yes. That was our position. I think that’s -- was the -- where the -- where 

Judge Sanderson essentially came out in his report as well, given that Gruber 

Hurst did not formally appear during the course of the hearing before Judge 

Sanderson. 

(2013 Hearing Trans. at 78:16-22). 

The transcript from the April 2008 hearing before Judge Sanderson confirms Ms. 

Clouston’s recollection of the position she took on behalf of VAC. To wit: 

“In addition, the agreed protective order clearly prohibits providing to anyone 

other than counsel hired for this case documents that have been designated as 

Counsel’s Eyes Only Confidential Information, but they’ve also violated that 

provision of the protective order by first providing the documents to the Gruber 

firm, who we think from the record were not counsel in this case when they were 

provided the information . . . . ” 

(2008 Hearing Trans. at 28). 

 Nor was Ms. Clouston aware of any subsequent fact at the February 25, 2013 hearing that 

would have made Gruber Hurst a party to the Protective Order: 

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Q. All right. Again, suffice it to say, Gruber Hurst does not become counsel of 

record in the VAC case on behalf of T-Netix and Securus, they return the 

documents, and you’re not aware of any document that they signed whereby they 

agreed to be subject to the protective order at least after Judge Sanderson had his 

hearing in the case. 

A. None that I’m aware of after that hearing. . . . 

(2013 Hearing Trans. at 83:23 – 84:4). 

 The reality is that VAC now attempts to make Gruber Hurst subject to the same 

Protective Order that it unequivocally said Gruber Hurst was not subject to five years ago. 

Nothing has changed in the intervening years, except that it now seems to further VAC’s 

unexplained objectives to argue that Gruber Hurst should be held in contempt of the Protective 

Order. This about face represents a classic case for judicial estoppel, where a party’s position 

has switched to suit the moment. See, Teledyne Industries, Inc. v. N.L.R.B., 911 F.2d 1214, 

1217-1218 (6th Cir. 1990) (“Judicial estoppel . . . preserves the integrity of the courts by 

preventing a party from abusing the judicial process through cynical gamesmanship, achieving 

success on one position, then arguing the opposite to suit an exigency of the moment.”). 

2. VAC is Collaterally Estopped From Arguing that Gruber Hurst is a Party to the 

Protective Order. 

 Judge Sanderson relied on VAC’s representations and argument in making his findings 

that Gruber Hurst was not a party to the Protective Order and not entitled to keep the documents. 

Because Judge Sanderson determined that Gruber Hurst was not a party to the Protective Order 

in 2008, VAC is also collaterally estopped from relitigating an issue “identical to that litigated in 

the prior action.” Copeland v. Merrill Lynch & Co., 47 F.3d 1415, 1422 (5th Cir.1995) (Noting 

that the four factors of collateral estoppel are “(1) the issue under consideration is identical to 

that litigated in the prior action; (2) the issue was fully and vigorously litigated in the prior 

action; (3) the issue was necessary to support the judgment in the prior case; and (4) there is no 

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special circumstance that would make it unfair to apply the doctrine.”). The issue was 

vigorously litigated and Judge Sanderson noted that “both sides have filed extensive pleadings 

relative to these motions with attachments.” (2008 Hearing Trans. at 4:6-8). It is clear also from 

the transcript that one of VAC’s primary claims before the Court was “that Gruber Hurst had 

[its] confidential information and documents” but was not a party to the Protective Order. Judge 

Sanderson agreed and gave Gruber Hurst the option of returning the documents or entering as 

counsel of record – and thereby becoming subject to the Protective Order. (2008 Hearing Trans. 

at 69:14-20; 70:10-16). Gruber Hurst did nothing subsequently to make itself subject to the 

Protective Order or undermine the collateral estoppel effect of Judge Sanderson’s ruling. 

3. There is no Factual Basis to Hold Gruber Hurst Liable as a Non-Party to the 

Protective Order. 

When challenged by the Court on the estoppel issue, VAC’s counsel claimed Gruber 

Hurst could be liable as a non-party to the agreement. It is well established, however, that 

“courts cannot enjoin the entire universe of potential violators of its orders.” Eli Lilly & Co. v. 

Gottstein, 617 F.3d 186, 195 (2nd Cir. 2010). VAC, meanwhile, references cases holding that a 

non-party is liable for contempt when the non-party “acts with the enjoined party.” Whitcraft, 

570 F.3d at 272 (5th Cir. 2009). This approach requires that the non-party “knowingly aid[], 

abet[], or conspire[] with another to evade an injunction or order of a court . . . .” Waffenschmidt, 

763 F.2d at 726 (5th Cir.1985). It also requires finding a lack of good faith, because while “good 

faith is not a defense to a civil contempt order, good faith is relevant to whether a non-party 

knowingly aided or abetted another in violating a court order.” Whitcraft, 570 F.3d at 272. 

For VAC to prevail on this conspiracy/aiding and abetting theory, it must prove that 

Gruber Hurst actually conspired with the Securus parties. VAC, however, presented no evidence 

at the hearing that any party to the Protective Order, including T-Netix or Securus, entered into a 

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conspiracy with Gruber Hurst to produce the Report. VAC called only two witnesses at the 

February 25, 2013 hearing: Stephanie Clouston and Dennis Reinhold. Neither offered any 

evidence that Gruber Hurst conspired with the Securus parties to possess or use the Report. Ms. 

Clouston, for instance, testified that she had no knowledge that Securus, Mr. Reinhold, or Mr. 

Smith had any involvement with the production of the Report to Combined, to wit: 

Q: . . . When I’m referring to the Securus parties we’ve got Securus, T-Netix, Mr. 

Reinhold, and Mr. Smith. 

* * * * * 

Q. You don’t have anything in your declaration or any document or anything in 

your testimony where you have knowledge that any of the Securus parties 

provided a copy of the McAlexander rebuttal report to Gruber Hurst. 

A. No. 

Q. And you don’t have any knowledge that they encouraged or asked Gruber 

Hurst to provide that document to anybody in the Combined Communications 

case or any other lawsuit? 

A. No, sir. 

(2013 Hearing Trans. at 100:16 – 101:4). 

 VAC’s only other witness was an adverse party, Mr. Reinhold, and he categorically 

testified that Securus “did not have the document,” and, “We still don’t have the document. 

We’ve never had the document.” (2013 Hearing Trans. 115:8-10).1

 This is not proof of a 

conspiracy. VAC’s position is further undercut by the evidence that Gruber Hurst presented. 

Tony Magee, the Gruber Hurst attorney involved in the inadvertent production of the Report in 

2010, unequivocally denied that Gruber Hurst acted in conspiracy with Securus, Mr. Reinhold, 

or Mr. Smith: 

 

1

 Mr. Reinhold also testified he had an electronic search run which did not find the document in Securus’ possession. 

In his words, “I wanted to make sure we did not have the document. I knew we did not have the document, because 

I had never seen it, nor had anyone in my office ever seen it, and so we did a search this past week.” (2013 Hearing 

Trans. at 114:15-19). 

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Q. . . . When you were doing this entire document production process in the 2010 

time frame, did you receive a copy of the McAlexander rebuttal report from the 

client, Securus, T-Netix, Mr. Reinhold, Mr. Smith, anyone from within the 

Securus parties holds? 

A. No. 

Q. Did you send a copy of it to them? 

A. No. 

Q. Did anyone from Securus, including Mr. Smith or Mr. Reinhold, ever direct 

you to produce a copy of the McAlexander rebuttal report to anyone in the 

litigation you were involved with? 

 A. No. 

(2013 Hearing Trans. at 292:14-293:1). 

In fact, Mr. Magee was completely unaware of the document’s existence or the prior 

contempt proceeding when Gruber Hurst inadvertently produced the Report in 2010. (2013 

Hearing Trans. at 241:16-21). It has been years since the original case settled and none of these 

supposed conspirators has even seen the Report at issue. VAC offers no plausible motive or 

purpose as to why Securus, Mr. Reinhold, Mr. Smith, and Gruber Hurst would conspire to 

produce an unseen document years after the fact. VAC has failed as a matter of law to make out 

a prima facie case that Gruber Hurst “knowingly aid[ed], abet[ted], or conspire[d] with another 

to” violate the Protective Order. Waffenschmidt, 763 F.2d at 726. Consequently, VAC has 

nothing to support a show cause order why Gruber Hurst, a non-party, violated the Protective 

Order. 

Even if there were a scintilla of evidence to support VAC’s aiding and abetting theory, it 

remains the undisputed fact that Gruber Hurst acted in good faith and immediately clawed back 

the document. Gruber Hurst cannot be held in contempt based on an aiding and abetting theory 

if it acted inadvertently and in good faith. Whitcraft, 570 F.3d at 272. (“Although good faith is 

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not a defense to a civil contempt order, good faith is relevant to whether a non-party knowingly 

aided or abetted another in violating a court order.”). In this matter, the computer forensic 

expert, David Cowen, testified that the Report only existed as part of a massive document 

production with over 600,000 images. It was never singled out or copied separate from that 

enormous group of documents. Nor did Gruber Hurst attempt to hide its reasons for clawing 

back the Report. In fact, had Mr. Magee not been so honest and transparent in his letter to 

Combined’s counsel, in which he named the McAlexander Rebuttal Report and clearly noted that 

he was clawing the document back due to a protective order and not privilege, the associate at 

Jones Day might never have brought the privilege log to Ms. Clouston’s attention. (2013 

Hearing Trans. at 42:15-20). (Ms. Clouston: “The issue was raised that this appears to be 

someone else’s document but how is it that Securus is claiming -- putting a document like that on 

their privilege log, is it their privilege, which struck me as odd. I looked at the privilege log and

I realized pretty quickly from the description what I at least thought the document likely was . . . 

. the particular McAlexander rebuttal report.”). Counsel for VAC erroneously stated at the 

February 25, 2013 hearing that VAC discovered the 2010 inadvertent production of the Report 

by sheer chance. In truth, VAC learned of the inadvertent disclosure as a direct result of Mr. 

Magee’s candid explanation in his August 27, 2010 letter of the reason why the Report was 

being clawed back. 

B. The Court’s Second Question: Assuming Gruber Hurst is Neither Subject to the 

Protective Order Nor Otherwise in Contempt of Court for Violating the Protective 

Order, Whether There is Any Reason or Basis to “Sanction” Gruber Hurst? 

1. There is No Reason to Sanction Gruber Hurst. 

The facts bear out that there is no reason to sanction Gruber Hurst for its inadvertent 

retention of the Report or its subsequent production and claw back of the Report. 

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The evidence established that Gruber Hurst, who was not a party to the 2008 Hearing, 

was not ordered to take a particular course of action by Judge Sanderson and made no 

representation to Judge Sanderson then or later as to what it would do. After Gruber Hurst 

represented to the Court that it still had “discovery responses and [expert] reports,” Judge 

Sanderson noted that Gruber Hurst should either return the documents or make an official entry 

as counsel of record. 

Judge: Well, I think the short answer is that needs to go back right now. If you 

and your firm want to formally enter an appearance as the third counsel 

representing T-Netix in this case, then so be it. But I think there are all kinds of 

confusions here when you are representing T-Netix or Securus in an Eastern 

District case. 

(Hearing Trans. at 69:14-19). 

* * * * * 

Judge: But I do want those documents returned to counsel whose appearance has 

already been entered in the case. Now, if you wish to enter an appearance 

formally and file a motion and entry of appearance in this case – that is, the case 

here in the Northern District of Texas -- then I think once you have been enrolled 

and your firm has been enrolled as cocounsel of record in the Northern District of 

Texas, you are then thereafter entitled to access under the terms of confidentiality 

order. 

(Hearing Trans. at 70:7-16). 

Judge Sanderson’s report and recommendation confirms that he understood that Gruber 

Hurst had been given two options: 

The evidence before the court and the statements made by counsel at the April 16, 

2008 hearing establish that the Gruber law firm successfully clawed back all 

copies of the McAlexander report from parties in the Eastern District of Texas 

case. Further, Eric Tautfest agreed - pursuant to the undersigned magistrate 

judge’s oral directive at the hearing - that copies of any documents which had 

been produced by VAC in this case under the agreed protective order and which 

the Gruber law firm had received from T-Netix’s counsel of record in this case 

would be destroyed or returned by the Gruber law firm unless or until the 

Gruber law firm entered its formal appearance as counsel of record for T-Netix 

in this action.

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Report and Recommendation at 6 (emphasis added). 

While Gruber Hurst returned the physical documents and deleted electronic versions 

(though, apparently, it missed one electronic version of the Report) later that same day, it is 

important to note that Gruber Hurst never represented to the Court at the hearing or later that 

Gruber Hurst would choose the option of returning the documents. Eric Tautfest testified to the 

same during the February 25, 2013 hearing. (2013 Hearing Trans. 193:18-194:1). 

Nor did Gruber Hurst make any subsequent representation to the Court about whether it 

would return or destroy documents or enter on the record as counsel. As noted, Mr. Tautfest did 

send a letter to Bell Nunnally the same day as the hearing in which he stated that he was 

returning “all documents in [Gruber Hurst’s] possession that were received from [Bell Nunnally] 

regarding the VAC case.” (Gruber Hurst Hearing Exhibit 3). Mr. Tautfest went on to note that 

Gruber Hurst “deleted the . . . documents from [its] database and . . . destroyed all working 

copies as well.” Id. While the McAlexander Rebuttal Report is clearly noted in the letter and the 

letter confirms a substantial effort on Gruber Hurst’s part to return and delete documents, the 

letter is not addressed to the Court and does not purport to be a representation to the Court that 

all documents are returned or destroyed. In fact, the letter goes beyond the options presented by 

Judge Sanderson, which did not specifically address electronic copies of documents. 

The testimony of Mr. Tautfest and others at the February 25, 2013 hearing confirmed that 

Gruber Hurst undertook real and substantial efforts both to return and delete documents before 

Mr. Tautfest sent his letter. For example, Mr. Tautfest testified that he met with the Gruber 

Hurst team after the 2008 Hearing and instructed Lisa Miller, a paralegal, that Gruber Hurst 

needed “to send back the originals to Bell Nunnally and . . . get into Summation, get the 

documents off of there, get them off the system, and round up any copies anybody has and get 

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them and delete them.” (2013 Hearing Trans. at 199:11-14). Ms. Miller testified that after she 

met with Mr. Tautfest, he instructed her to “get all the documents out of any working notebooks 

and on the system and destroy it all.” (2013 Hearing Trans. 225:13-15). She recalled that Mr. 

Tautfest also instructed her to get any copies from “the recycle bin so they could be shredded and 

return -- delete all the electronic copies off the system and then return the originals back to him 

so that he could prepare a letter and have them returned over to Bell Nunnally.” (2013 Hearing 

Trans. 225:15-19). More to the point, Ms. Miller specifically testified as to her extensive steps to 

remove any electronic documents. To wit: 

Q. So I want walk you through that process step-by-step. So you said you knew 

how to go into Summation and delete the documents. So what’s the first thing 

you did in that regard? 

A. I would have gone into the actual database that we had opened. And then you 

go in and you mark them. There’s a way where you can just mark the documents. 

And then you say delete and it says purge, because that’s the only way to get them 

out of the actual database. If you just delete them they’re still -- you can still see 

them. And then there’s a back end that you go in the back way. 

Q. Did you hit the purge portion? 

A. Yes. And then you have to go in the back end of it also through the actual hard 

drive of the, like the C drive, S drive, might have been S. I can’t remember what 

it was called over there. Then you go in and there are actual physical documents 

that are on the hard drive in folders labeled whatever numbers these are. You 

have to go in and actually hit manually delete and move them out of the folders. 

That way they don’t reappear in the back end of it. So there’s two processes to it. 

Q. And so you performed -- 

A. I did both. 

Q. -- performed both of those processes to delete the documents from the 

Summation database? 

A. Yes. 

(2013 Hearing Trans. 227:18-228:18). 

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Mr. Tautfest testified that after Ms. Miller said she had deleted the documents, he 

“searched for several of those documents [on Gruber Hurst’s system], [but] none of them came 

up.” (2013 Hearing Trans. at 200:1-2). Mr. Tautfest also testified that he had no doubt the 

documents, including the Report, were deleted because he “. . . went into Summation and 

confirmed that [he] could no longer access those documents, just to make sure that they weren’t 

there.” (2013 Hearing Trans. at 203:18-20). 

Of course, unbeknownst to Mr. Tautfest, Ms. Miller, or anyone at Gruber Hurst, a single 

electronic copy of the Report remained on the system within a large file containing 600,000 

electronic images. This unknown fact created the perfect storm for Mr. Magee, who arrived after 

the deletion and had no knowledge of the Report, the Protective Order, or the prior hearing in 

2008, to inadvertently produce the Report. As discussed above, Mr. Magee was wholly lacking 

in any sort of deliberate or willful misconduct and made nothing more than an inadvertent 

mistake, which, in part, resulted from his tenacity in meeting discovery obligations in another 

suit. VAC elicited no facts to indicate that this was anything other than innocent, inadvertent 

conduct or that Gruber Hurst did not take all reasonable steps to return/destroy the documents. 

As the Court itself noted at the February 25, 2013 hearing, “there’s no evidence in the record that 

[Gruber Hurst] intentionally or willfully or – didn’t [destroy the document].” (2013 Hearing 

Trans. 323:3-4). Even if Gruber Hurst’s good faith efforts failed to meet Judge Sanderson’s 

expectations, there is no obligation on this Court to follow-up. Judge Sanderson himself 

indicated that any future use of the documents in the related litigation “needs to be brought to the 

attention of Judge Ward and whoever the assigned magistrate judge who is handling discovery in 

that case.” (2008 Hearing Trans. 71:17-19). 

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16 

Given those facts set forth above, the failure to destroy this one copy of the Report 

provides no reason to “sanction” Gruber Hurst, especially given that the reason courts impose 

sanctions is to punish and deter dishonest, underhanded misconduct, not where there is a mistake 

or inadvertence. 

2. There Is No Basis to Sanction Gruber Hurst. 

Beyond the fact that there is no reason to sanction Gruber Hurst, there also is no basis to 

sanction Gruber Hurst under applicable contempt law, Rule 11, or the Court’s inherent powers to 

sanction a party. 

a. Contempt 

With respect to its contempt powers, the scope of the findings and recommendations that 

the Court may make in this matter is limited not only by the District Court’s Order of Reference, 

but also by Movant’s application for a show cause order. Specifically, the District Court’s Order 

of Reference narrows the area of inquiry to VAC’s “application for order to show cause” related 

to whether Gruber Hurst and others “should not be held in contempt for violation of the court’s 

March 3, 2006 protective order.” The Order of Reference2

 does not authorize this Court to make 

any findings or recommendations as to whether Gruber Hurst failed to comply with any oral 

directive from Judge Sanderson or failed to proceed according to the spirit of what was 

contemplated during the hearing. Likewise, Movant’s application for show cause order requests 

 

2

 An Order for Show Cause is not required for direct contempt, but direct contempt must take place in the presence 

of the judge issuing the order of contempt. It is “available only in limited circumstances where an individual’s 

misconduct not only occurs ‘within the personal view of the judge, under his own eye,’ . . . but also ‘disturbs the 

court’s business.’” Brandt v. Gooding, 636 F.3d 124, 133 (4th Cir. 2011) (citing In re Oliver, 333 U.S. 257 (1948)). 

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17 

that Gruber Hurst be held in contempt “for Violation of the Court’s March 3, 2006 Protective 

Order.”3

 (D.E. 204). 

Even if the Order of Reference authorized this Court to address compliance with what the 

parties and Judge Sanderson understood what was going to happen as a result of the April 2008 

hearing, there is no basis for contempt because Judge Sanderson made no order that Gruber 

Hurst may be held to have violated. A party seeking an order of contempt must “establish by 

clear and convincing evidence: (1) that a court order was in effect; (2) that the order required 

certain conduct by the respondent; and (3) that the respondent failed to comply with the court’s 

order.” Piggly Wiggly, 177 F.3d at 382 (5th Cir. 1999). Judge Sanderson, however, did not 

order any certain conduct; rather, he merely stated that he “want[ed] those documents returned to 

counsel” and his belief that the documents “need(s) to go back.” (2008 Hearing Trans. at 70:7-8; 

69:15). In expounding on the court’s position, Judge Sanderson gave Gruber Hurst two different 

options by which to proceed, which can hardly be equated to an order requiring “certain 

conduct.” 

Along those lines, holding Gruber Hurst in contempt is equally inappropriate because 

VAC failed to demonstrate that Gruber Hurst did not substantially comply with the spirit of what 

Judge Sanderson stated during the April 2008 contempt hearing. To that end, a “party may avoid 

a contempt finding where it has substantially complied with the order, or has made every 

reasonable effort to comply.” In re Rodriguez, 2007 WL 593582, 7 (W.D. Tex. 2007) (citing

U.S. Steel Corp. v. United Mine Workers of Am., Dist. 20, 598 F.2d 363, 368 (5th Cir.1979)). As 

the court noted in Boink Systems, Inc. v. Las Vegas Sands Corp., a minor failure to delete does 

not require a contempt proceeding: 

 

3

 Presumably, VAC focused on only the Protective Order because it recognizes that Judge Sanderson did not order 

Gruber Hurst to do anything. 

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18 

[Plaintiff’s] Counsel found a single image [of its trademark image] on the 

[defendant’s] site and attached an enlarged copy of the screen capture depicting 

the webpage containing the image as an exhibit to the petition. Thus, LVS has 

established clear and convincing evidence that the court’s permanent injunction 

has been violated. However, the court finds that BSI has demonstrated that it 

made good faith reasonable efforts to comply with the terms of the permanent 

injunction and has substantially complied. Additionally, BSI took prompt 

corrective action once the violation was brought to its attention. Counsel for LVS 

elected to file this petition twelve days after finding a single image on BSI’s 

website instead of picking up the phone and notifying opposing counsel of the 

problem. The problem could have, and should have, been resolved expeditiously 

and with minimal expense to both sides. 

2011 WL 3419438, 3 (D. Nev. 2011). 

Similarly, in this matter, Gruber Hurst took every reasonable step to return or delete 

copies of the Report by searching its computers, servers, attorney working files, and even recycle 

bins. It was only through a quirk of fate, not lack of due diligence, that the Report survived and 

was produced. Once it was produced, Gruber Hurst immediately clawed it back and, now, has 

brought its own Motion to Purge the document at its own expense. This is exactly the sort of 

situation that substantial compliance was meant to cover. 

b. Rule 11 

Rule 11 does not apply either. By its terms, Rule 11 only applies where there is a 

“pleading, written motion, or other paper.”4

 Fed. R. Civ. P. 11; see, Rogler 2002 WL 307731 at 

4 (10th Cir. 2002) (“Rule 11 only applies to the presentation of ‘pleading[s], written motion[s], 

or other paper[s]’ to the court.”). While Eric Tautfest was present at the hearing before Judge 

Sanderson and answered the court’s questions, he never filed any “pleading, written motion, or 

other paper.” Moreover, Rule 11(b) further narrows its applicability to four limited implied 

representations an attorney makes when submitting a written pleading to the court, namely: 

 

4

 While the Rule does note that a party may be sanctioned for “later advocating” a written filing, this would not 

apply to Gruber Hurst because by its words it still requires a filing first. 

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19 

(1) it is not being presented for any improper purpose, such as to harass, cause 

unnecessary delay, or needlessly increase the cost of litigation; 

(2) the claims, defenses, and other legal contentions are warranted by existing law 

or by a nonfrivolous argument for extending, modifying, or reversing existing law 

or for establishing new law; 

(3) the factual contentions have evidentiary support or, if specifically so 

identified, will likely have evidentiary support after a reasonable opportunity for 

further investigation or discovery; and 

(4) the denials of factual contentions are warranted on the evidence or, if 

specifically so identified, are reasonably based on belief or a lack of information. 

Fed. R. Civ. P. 11(b). 

None of the aforementioned situations applies to the facts before this Court. There is no 

basis to assert that Mr. Tautfest, who never actually responded to the Court’s two options, made 

any representation for (1) the purpose of delay, or (2) to advance frivolous arguments. Certainly, 

if Mr. Tautfest’s silence is taken as consent to choose one course or another, he has (3) 

reasonable evidentiary support, or a (4) reasonable belief that the documents were deleted 

because of his discussions with Ms. Miller and his own database searches. Even if Mr. Tautfest 

had violated one of the implied representations, Rule 11 contemplates a twenty-one day safe 

harbor before a motion for sanctions can be brought by a party. Rule 11(c)(2). A court may act 

on its own without a motion by a party or safe harbor. However, “[w]hen courts act on their own 

under Rule 11,” and without allowing a safe harbor for the party to correct its actions “available 

sanctions are limited to ‘nonmonetary sanctions or a monetary penalty payable to the court’—an 

award of attorney’s fees or other expenses is not appropriate.” Florance v. Bush, 2010 WL 

2710665, 4, n.6 (N.D. Tex. 2010) (citing Marlin v. Moody Nat’l Bank, N.A., 533 F.3d 374, 379 

(5th Cir. 2008); see, Burger v. Military Sea Lift Command, 1999 WL 511534, 4 (5th Cir. 1999) 

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20 

(upholding a district court’s discretion to refuse awarding Rule 11 sanctions absent a finding of 

bad faith). 

c. The Court’s Inherent Powers 

Finally, the only other possible basis to sanction Gruber Hurst would be the Court’s 

inherent powers. 5 While a court has the inherent power to impose sanctions, “the threshold for 

the use of inherent power sanctions is high.” Chaves v. M/V Medina Star, 47 F.3d 153, 156 (5th 

Cir. 1995) (citing Reed v. Iowa Marine and Repair Corp., 16 F.3d 82, 84 (5th Cir. 1994)). A 

court “should ‘ordinarily’ rely on a rule or statute rather than their inherent power.” Florance v. 

Bush, 2010 WL 2710665, 4 (N.D. Tex. 2010) (citing Chambers v. NASCO, Inc., 501 U.S. 32, 50 

(1991)). In fact, the Fifth Circuit “has held that in order to impose sanctions against an attorney 

under its inherent power, a court must make a specific finding that the attorney acted in bad 

faith.” Elliott, 64 F.3d at 217 (remanding to the district court because “it failed to make a 

specific finding of bad faith”) (citing Chaves, 47 F.3d at 156). As set forth above, the evidence 

here shows mere inadvertence and does not provide a basis for a “bad faith” finding against 

Gruber Hurst. 

C. VAC Failed to Demonstrate By Clear and Convincing Evidence that Gruber Hurst 

Is In Contempt of Court By Violating the Protective Order. 

While the Court only asked for briefing on the two issues addressed above, Gruber Hurst 

commends to the Court’s attention Gruber Hurst’s prior Response to VAC’s Application for 

Order to Show Cause (D.E. 230) and that of T-Netix/Securus (D.E. 232), which Gruber Hurst 

adopts by reference, and the Statement of Position that Gruber Hurst provided to the Court at the 

 

5

 Sanctions under 28 U.S.C. § 1927 (prohibiting vexatious multiplication of litigation by an attorney) are punitive in 

nature and require “clear and convincing evidence, that every facet of the litigation was patently meritless.” Procter 

& Gamble Co. v. Amway Corp., 280 F.3d 519, 525-26 (5th Cir. 2002). This requires “evidence of bad faith, 

improper motive, or reckless disregard of the duty owed to the court.” Id. 

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21 

February 25, 2013 Hearing. (Attached to this Post-Hearing Brief as Exhibit A). Briefly, even if 

Gruber Hurst were subject to the Protective Order, GH’s Statement of Position outlines that: 

(1) Gruber Hurst would then be entitled to lawfully possess the Report because it is a party 

to the Protective Order. While VAC might argue that Gruber Hurst was required to 

destroy the Report, the Protective Order did not require Gruber Hurst to destroy the 

document. Section 26 provides that counsel shall be entitled to maintain copies of all 

written discovery requests and responses. As the Report was an expert report (and TNetix’s expert report moreover), Gruber Hurst would have been permitted by the 

Protective Order to keep the Report. Further, Section 26 actually contemplated that 

parties to the Protective Order could retain non-physical, electronic material subject to 

the Protective Order. 

(2) Civil contempt is not appropriate because VAC’s motion does not seek (a) to enforce 

compliance with a court’s order through coercion or (b) to compensate a party who has 

suffered unnecessary injuries or costs because of contemptuous conduct – fundamental 

elements of any civil contempt action. It does not seek to enforce compliance through 

coercion because there is nothing to coerce – the Report was clawed back and Gruber 

Hurst is more than willing (and has been so since last September) to destroy the Report. 

VAC does not seek compensation because VAC offered no evidence at the contempt 

hearing establishing any actual damage or costs (including any attorney’s fees they might 

have claimed) subject to compensation. Rather, VAC is seeking retribution. 

(3) Because Gruber Hurst not only took reasonable steps to remove the Report from its 

computers in 2008 and quickly clawed back the Report in 2010, it “substantially 

complied” with the protective order, which substantial compliance negates any contempt 

finding.6

 

(4) Finally, VAC’s request is barred by laches given that, at best, it took 10 months to 

prosecute its contempt claim. VAC’s utter lack of diligence exposes the fact that the acts 

about which it complains have not caused any actual damage to VAC and do not raise 

any significant risk of potential damage in the future. 

D. Gruber Hurst Urges the Court to Grant Its Motion to Purge. 

In closing, Gruber Hurst would again note to the Court that it regrets that the Report was 

not completely wiped off its computers despite the diligent efforts of Mr. Tautfest and Ms. 

 

6

 “A party may avoid a contempt finding where it can show that it has substantially complied with the order, or has 

made every reasonable effort to comply.” In re Rodriguez, 2007 WL 593582, 7 (W.D. Tex. 2007) (citing U.S. Steel 

Corp. v. United Mine Workers of Am., Dist. 20, 598 F.2d 363, 368 (5th Cir.1979)). Even if a violation is 

demonstrated, the defendant may “cause the district court to withhold the exercise of its contempt power” with 

either “mitigating circumstances” or “substantial compliance with the [court’s] order.” Whitfield v. Pennington, 832 

F.2d 909, 914 (5th Cir.1987). “A party substantially complies when it takes all reasonable steps to do so, but 

nonetheless contravenes the court order by good faith mistake or excusable oversight.” F.T.C. v. Lane Labs-USA, 

Inc., 624 F.3d 575, 590-591 (3rd Cir. 2010). 

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22 

Miller, who believed that they had destroyed or returned all copies of the Report. To that end, 

Gruber Hurst has tried repeatedly to remedy this situation. The Court heard testimony that, as 

early as last September, Gruber Hurst went to VAC’s counsel offering to do what needed to be 

done to allay VAC’s concerns and claw back any copies of the Report that might still exist. Last 

November, it again reached out to VAC’s counsel by telephone and in writing, willing to go even 

one step further and retain a forensic computer expert at its own expense to permanently delete 

the Report from its computers. Having been rebuffed by VAC, Gruber Hurst filed its own 

Motion to Purge, which inexplicably was opposed by VAC, seeking the Court’s permission to do 

what it has been willing to do and which VAC’s motion to reopen asks for: to destroy the Report 

for all time and to otherwise remedy this situation. 

To the extent the Court feels the need to vindicate any interest, particularly in the spirit of 

what was contemplated during the hearing with Judge Sanderson, Gruber Hurst urges the Court 

to grant its Motion to Purge and to permit Gruber Hurst, at its own expense, to engage Mr. 

Cowen, the forensic expert who testified at the contempt hearing, to permanently delete any 

electronic copies of the Report and to certify to the Court that such deletion has been 

accomplished. 

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23 

Respectfully submitted, 

FISH & RICHARDSON P.C. 

By: s/ William B. Mateja 

William B. Mateja 

 Texas Bar No. 13185350 

 mateja@fr.com 

 Albert A. Starkus III 

 Texas Bar No. 24051376 

 starkus@fr.com 

1717 Main St., Suite 5000 

Dallas, Texas 75201 

(214) 747-5070 – Telephone 

(214) 747-2091 – Facsimile

GRUBER HURST JOHANSEN HAIL SHANK, 

LLP 

By: s/ A. Shonn Brown 

 G. Michael Gruber

 Texas Bar No. 08555400 

 mgruber@ghjhlaw.com

 Anthony J. Magee

 Texas Bar No. 00786081 

 amagee@ghjhlaw.com 

 A. Shonn Brown 

Texas Bar No. 24007164 

sbrown@ghjhlaw.com 

1445 Ross Avenue, Suite 2500

Dallas, Texas 75202

(214) 855-6800 – Telephone

(214) 855-6808 – Facsimile 

COUNSEL FOR GRUBER HURST 

JOHANSEN HAIL SHANK, LLP 

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CERTIFICATE OF SERVICE 

On this 4th day of March, 2013, I caused the foregoing document to be electronically 

filed with the Clerk of the Court for the Northern District of Texas, Dallas Division, using the 

case filing system of the Court.

I hereby certify that I have served all counsel of record electronically or by another 

manner by FED. R. CIV. P. 5(b)(2). 

s/ Albert A. Starkus III 

Albert A. Starkus III

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