### IN THE UNI TED STAT ES COURT OFAPPEALS FOR THE FIF TH CIRCU IT

No. 11-20557

SMITH & FULLER, P.A.; HUGH N. SMITH, Appellants
v. COOPER TIRE & RUBBER COMPANY, A Delaware Corporation, Defendant-Appellee

Appeal from the United States District Court for the Southern District of Texas

Before REAVLEY, PRADO, and OWEN, Circuit Judges. REAVLEY, Circuit Judge: The law firm of Smith & Fuller, P.A. and Attorney Hugh N. Smith appeal from the district court’s award of sanctions in favor of the Appellee because the Appellants violated the court’s protective order. The district court imposed the sanctions pursuant to F E D
. R. C IV
. P. 37(b). Appellants contend that the district court lacked authority to impose sanctions and that the fees and exp e n s e s s ought by the appellee were unreasonable. We AFFIRM. I. Factual Background In the underlying action in this case, Appellants Smith & Fuller, P.A. and Hugh N

. Smith represented the Trenado family in a products liability suit against Appellee Cooper Tire & Rubber Company. That case resulted in a jury U n i te d S ta te s C o u rt o f A p p ea l s

F i ft h C i rc u i t 

### F I L E D June 21 , 20 12 Lyle W . Cayce Clerk Case: 11-20557 Document: 00511894808 Page: 1 Date Filed: 06/21/2012No. 11-20557

v e r d i ct in favor of Cooper in September 2010. Prior to trial, the district co u r t

e nt ered an Amended Protective Order of Confidentiality pursuant to F E D
. R

. C IV
. P. 26(c) to protect Cooper’s trade secrets and confidential information produced during discovery. The Protective Order strictly limited access o f p r o t ected information to “authorized persons, solely in the performance of their duties in connection with the trial preparation of this case.” S m i t h and his law firm do not dispute that they violated this Protective Order. In August 2010, Smith and his firm inadvertently disseminated Cooper’s trade secrets and c onfidential information to a number of personal injury lawyers during a conference sponsored by Attorneys Information Exchange Group, Inc. about obtaining discovery from Cooper. The releas e o f the 1 confidential information occurred when someone from Smith’s firm mistakenly copied it onto compact discs that were the n di stributed to the attorneys attending the conference. Cooper discovered the violation when its couns e l in this case r e c e iv e d documents from a plaintiff’s attorney in an unrelated suit against Cooper. Many of those docum e nts were marked with Trenado Bates numbers and had been deemed confidential. O n September 2, 2010, the district court entered an order on Coo p e r ’ s Motion to Enforce Protective Order, which stated that “[i]t is clear that the court’s Protective Order has been violated.” The cou r t ordered Smith and his firm to take immediate action to enforce the Protective Order and to correct the violation. The court reserved its ruling on Cooper’s motion for sanctions.

S mi th had pr evious ly agreedthat his f irmw oulds erve as a “ clea ring hous e [ sic ] for 1 the acc umu late d info rm atio n [c once rning acc ide nts involvin g C o ope r tir es man ufac tur ed at Coop e r ’ s Texark ana and Ark ans as plan ts ] and to mak e that info rm atio n availabl e to cont ribut ing at tor neys .” 2 Case: 11-20557 Document: 00511894808 Page: 2 Date Filed: 06/21/2012No. 11-20557

Following trial, the dis t r i c t c o u rt held that Smith and his firm did not willfully violate the Protective Order. It determined, however, that sanctions should be imposed for s e v e r a l r e asons. The court recognized that Cooper had sought a strongly worded protective order an d h a d vigorously moved for its enforcement. Smith understood the importance o f c o m p l ying with the order inasmuch a s C o o p e r’ s p ro duction of confidential documents was made in reliance
upon the protections given by the court; yet, Smith allowed dissemination of the protected information to personal injury lawyers who sue Cooper and other tire manufacturers. As a result, Cooper incurred attorneys’ fees and expenses in its

e f f o rt to identify the violation and to enforce the Protective Order. The co u r t also noted that Smith had previously violated a similar protective order. The 2 district court h e l d t h a t sanctions were appropriate in order to deter future violations of protective orders and to reflect the seriousness of such orders. Pursuant to F E D
. R. C IV
. P. 37(b)(2)(C), the court ordered Appellants to reimburse Cooper for the attorneys’ fees and expenses connected to Appellants’ violation of the Protective Order. The court ordered Cooper to submit affidavits setting forth the services for which it sought reimbursement, including time expended, reasonable hourly rates sought, and proof of expenses incurred. After reviewing Cooper’s submission, the court ordered Appell a n t s to pay Cooper $29,667.71 in fees and expenses. Appellants now appeal.

Sm ith wa s san cti oned for wi llf ully violat ing a pr ote ctive ord er in anot her cas e agains t 2 Coop er by pr ovidi ng conf ide ntial mat eria l to an att orne y in Arizona

. See McDo nal d v. Coop er Ti re & Rubbe r Co. , No. 801CV1306T2 7TG W, 2005 WL 3372855 , at *1 (M .D

. Fla. De c. 12, 2005) (unp ublis hed)

. 3 Case: 11-20557 Document: 00511894808 Page: 3 Date Filed: 06/21/2012No. 11-20557 II. Standard of Review A district court’s imposition of sanctions pursuant to Rule 37(b) is reviewed for an abuse of discretion. O’Neill v. AGWI Lines , 74 F.3d 93, 95 (5th Cir. 1996). “The district court’s underlying findings of fact are reviewed for clear

error and its underlying conclusions of law reviewed de novo.” Am. Airlines, Inc. v. Allied Pilots Ass’n , 228 F.3d 574, 578 (5th Cir. 200 0). III. Discussion A. Application of Rule 37(b)(2) Sanctions to the Violation of a Rule 26(c) Protective Order
As noted above, the district court provided several reasons for its determination that sanctions were proper. The Appellants contend that the violation of the Protective Order was inadvertent a n d th a t the court erred by imposing sanctions. They further argue that the district c ourt’s remedial powers were limited to the “Inadvertent Disclosure” provision of the Protective Order. “F E D
. R. C IV
. P. 37(b) empowers the courts to impose sanctions for failures to obey discovery o r d ers. In addition to a broad range of sanctions, including contempt, F E D
. R. C IV
. P. 37(b)(2) authorizes the court to impose a concurrent sanction of reasonable expenses, including attorney’s fees, caused by the failure to obey a discovery o r d e r . ” Falstaff Brewing Corp. v. Miller Brewing Co. , 702 F.2d 770, 784 (9th Cir. 1983). The district court “has broad discreti o n u nder Rule 37(b) to fashion remedies suited to the misconduct.” Pressey v

. Patterson , 898 F.2d 1018, 1021 (5th Cir. 1990). This discretion, however, is limited. “[U]sually,

. . . a finding of bad faith or willful misconduct [is required] to support the severest remedies under Rule 37(b)—striking pleadings or dismissal of a case.” Id. at 1021. Lesser sanctions do not require a finding of willfulness. See

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Chilcutt v. United States , 4 F.3d 13 1 3 , 1 3 2 3 n.23 (5th Cir. 1993) (stating that district courts “have authority to gr a n t a b road spectrum of sanctions” under Rule 37(b), and “neither this Court nor the Supreme Court has ever determined that the lack of willful, contumacious, o r p r o longed misconduct prohibits all sanctions”). Having found no willful misconduct, the district court here imposed one of the least severe sanctions under its authority. See id. at 1320 n.17. Appellants cite the Eleventh Circuit’s decision in Lipscher v. LRP Publ'ns, Inc. , 266 F.3d 1305 (11th Cir. 2001), to argue that the district court lacks authority t o i m p o s e Rule 37(b) sanctions for violation of F E D
. R. C IV
. P. 26(c) protective orders. The Lipscher court reasoned that Rule 3 7 (b ) ( 2 ) does not mention Rule 26(c) protectiv e o r d e r s and that the rule applies only when “a party ‘fails to obey an order to provide or permit discovery

. . . . ’” I d

. a t 1323 (quoting Rule 37(b)(2)). The court held that “a Rule 26(c) protective order is not ‘an order to provide or permit discovery,’ and therefore, such orders do not fall within the scope of Rule 37(b)(2).” Id. (citations omitted). The Eleventh Circuit’s narrow app l i c ation of Rule 37(b) has been questi o ned by several courts. Indeed, the effect of the Rule was broadened 3 when it was amende d in 1970. The Advisory Committee Notes to the 4

See Va ldez- Casti llo v . BuschEntm ’t Corp. , No. 06- 20772- CIV, 2 008 WL 4 999175, at 3 *5–6 (S .D

. Fla. Nov. 20, 2008) (unp ublis hed) ; Whi tehea d v. Gatewa y C h ev rolet, Ol dsm obi le , No. 03 C 5684, 2004 WL 1459478 , at *3 (N .D

. Ill. Jun. 29, 2004) (unp ublis hed) (r efu sin g to follow Lip sch er and holding that im pos ing Rule 37(b ) san cti ons of att orne ys’ fee s may be aw ard ed for violat ion of a p rot ect ive ord er)

. The 1970 Advis ory Com mi tte e Not es st ate in rele vant par t: “The sc ope of Rule 37(b )( 2) 4 is broa dene d by exten ding it to inclu de any ord er ‘to pr ovide or p erm it dis cover y,’ inclu ding ord ers iss ued unde r Rules 37(a) and 35. Vario us rule s au t h orize ord ers for dis cover y-- e.g. , Rule 35(b )( 1), Rule 26(c ) as revis ed, Rule 37(d). Rule 37(b )( 2) sho uld pr ovide com pr ehens ively foren for cem ent of all thes e o rd ers .” (Em phas is add ed) ( Inter nal cit atio n o mi tte d)

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ame ndments have been oft cited by courts when imposing Rule 37 sanctions. See, e.g., Westinghouse Elec. Corp. v. Newman & Holtzinger, P.C. , 992 F.2d 932, 934–35 (9th Cir. 1993); Poliquin v. Garden Way, Inc ., 154 F.R.D. 29, 31 (D. Me. 1994). There is thus significant autho r i t y i n support of the imposition of Rule 37(b) sanctions for violation of Rule 26(c) protective orders. See Falstaff Brewing Corp. , 702 F.2d at 784 (holding that Rule 37(b)(2) authorizes the court to impose sanctions for disobeying a discovery order); United States v. Nat’l Med. Enters., Inc. , 792 F.2d 906, 911 (9th Cir. 1986) (upholding the court’s grant of sanctions under Rule 37(b) for violation of a protective order) ; Poliquin , 154 F.R.D. at 31–33 (imposing sanctions of attorney’s fees and costs pursuant to Rule 37(b) for violations of a protective order). Even under Lipscher’s narrow reading of Rule 37(b), however, the district court here concluded that its Protective Order in this case was an “or der to provide or permit discovery” as th e p h r a s e is used in Rule 37(b)(2). We agree. The Protective Order in this case: “govern[ed] confidential material produced or disclosed by these Defenda nts or Plaintiff[s] in response to formal or informal discovery conducted in th i s m a tter” (¶ 3); allowed each party to designate as confidential material “all or any portions of documents, things and information it produces formally or infor m a l l y t o the other parties to this litigation” (¶ 4); addressed the “inadvertent [or] unintentional

. . . production of any confidential material” (¶¶ 5, 13); includ e d p r o cedures for objecting to the designation of material produced as confidential (¶ 6); limited access to confidential material (¶ 7); contained a provision to address confi dential materials when “any subpoenas, requests for production, or any other forms of discovery

. . . are served on any party to this Prot ective Order” (¶ 10); and included provisions

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regulating the storage, use in depositions , an d th e r e turn of c o nf idential material (¶¶ 9, 12, 15). In our view, by pre s c r ib i n g the method and terms of the discovery of confidential material, the Protective O r d e r was granted “to provide or permit discovery” of confidential documents within the meaning of Rule 37(b). See F E D
. R. C IV
. P. 37(b)(2)(A). Indeed, no one disputes that Cooper produced thousands of pages of trade secrets or confidential information in reliance on the Protective Order. Thus, there is no basis to vacate the district court’s determination. 5 Appellants’ argument that the di s t r ict court could not impose sanctions because the Protective Order addressed the “Inadvertent Dis c l o sure” of documents is unavailing, as this provision of the or d e r di d not restrict the district court. Pursuant to Rule 37(b), the court is authorized to impose sanctions against parties or counsel, “‘including at t orney’s fees,’ caused by the f a ilure to comply with discovery orders.” Roadway Express, Inc. v. Piper , 4 4 7 U.S. 752, 763, 100 S. Ct. 2455, 2462–63 (1980). The district court provided specific and well-reasoned grounds to imp o s e s anctio n s a s it determined that any l e s s e r p e nalty would not have been an adequate future deterrent. Appellant s concede that they violated the court’s Protective Order, and it was well within the court’s discretion to use sanctions as a tool to deter future abuse of discovery. See Adolph Coors Co. v. Movement Against Racism and the Klan , 777 F.2d 1538, 1542 (11th Cir. 1985) (observing that “a primary purpose of Rule 37 sanctions is to deter future abuse of discovery”) (citing Nat’l Hockey L e a g u e v. Metro. Hockey Club, Inc. , 427 U

. S

. 6 3 9 , 6 4 3, 96 S. Ct. 2778, 2781 (1976)); see also

App ellant s als o rely on Ti ber i v. CIGN A Insura nce Com

pa ny , 40 F.3d 110 (5t h Cir. 5 1994) , to co nten d thatRule 37(b) sanct ions are inapp licable to Rule 26. App ellant s’relianc e on Ti ber iis m isp lace d as thatc asec once rnedF E D

. R. C IV

. P. 37(a)( 4). Id. at111

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Batson v. Neal Spelce Assocs., Inc. , 7 6 5 F.2d 511, 514 (5th Cir. 1985) (holding that under Rule 37(b)(2), a “dismissa l i s proper only in situations where the deterrent value of Rule 37 cannot be substantially achieved by the use of less drastic sanctions” (emphasis added)); Bluitt v. Arco Chem. Co. , 777 F.2d 188, 190 (5th Cir. 1985) (same). B. Reasonableness of Attorneys’ Fees and Expenses Appellants make several arguments c o n t e s ting the amount of the attorneys’ fees awarded to Cooper. A party can be held responsible only for the reasonable attorneys’ fees and expenses caused by the party’s misconduct. See Tollett v. City of Kemah , 285 F.3d 357, 368 (5th Cir. 200 2) (citing Chapman & Cole & CCP, Ltd. v. Itel Container Int’l B.V. , 865 F.2d 676, 687 (5th Cir. 1989)). This court uses the “lode s t a r” method to calculate attorneys’ fees, which is applied by multiplying the number of hours reasonably expen d e d by an appropriate hourly rate in the community for the work at issue. Id. at 367. There is a “strong presumption that the lodestar award is the reasonable fee[.]” Heidtman v. County of El Paso , 171 F.3d 1038, 1044 (5th Cir. 1 999). The record shows that in resp o n s e t o the district court’s order, Cooper timely filed affid avi t s from Attorney T. Christopher Trent, its lead counsel in this case, and from Attorney Nicole K. Schwieterman, whose law firm served as Cooper’s national discovery counsel, to establish its attorneys’ fees and expenses associated with identifying the Appellants’ violation of the Protective Order and enforcing that order. The affidavits and supporting evidence showe d t h e time spent by Cooper attorneys investigating the violation, drafting various motions to enforce the Protective Order, preparing replies to the Appellants’ responses, coordinating and conferring with Cooper, and attending court hearings. The

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affidavits also documented the hourly rates of the attorneys and paralegals who worked on this matter. The affidavits of counsel may alone be suffici e n t proof for purposes of Rule 37 to establish the amount of fees to be awarded. See Tollett , 285 F.3d at 367 (citing Shipes v. Trinity Indus ., 987 F. 2 d 3 1 1, 323–24 (5th Cir. 1993)). To the extent that the Appellants argue that Cooper reli ed on multiple f i r m s and generated unreasonable fees to investigate the violation of th e Prote c t iv e Order, we are unpersuaded. The district court considered various investi g a t iv e actions, motion preparations, and hourly rates to conclude that Cooper’s claimed expenses were reasonable. Our review of the record shows no abuse of discretion by the district court. This is particularly true since Cooper did not learn of the violation until the eve of trial in the underlying action when its lead co u n s e l was engaged in trial preparation, thereby causing a need for additional involvement by Cooper’s national discovery counsel. Appellants further argue that th e di s trict court erroneously allowed C o o p e r t o submit a “necessary affidavit of a third-party” to establish the reasonableness of its fees after t he expiration of the fifteen-day time period established by the court. The district court has b r o a d discretion to control its

own docket and permit the filing of pleadings. See Enlow v. Tishomingo Cnty., Miss. , 962 F.2d 501, 507 & n.16 (5th Cir. 1992). Appellants complain that they

were unable to respond t o t h e third-party affidavit. However, Appellants not only fail to explain how they would or could have responded to the affidavit, but they also fail to show any prejudice from its submission because the third-party affidavit was neither required nor necessary. As noted above, here the timely

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affidavits of Cooper’s counsel sufficiently established the fees to be awarded. See Tollett , 285 F.3d at 367. IV. Conclusion The extra time and effort exerted on this matter could have been avoided had the Appellants been more careful in the handling of Cooper’s confidential materials. The Protective Order was grant e d specifically to protect Cooper’s trade secrets and confidential information from incidents such as this. Although Appellants contend that they made great effort s t o correct the violation, guarding against the dissemination of its confi d ential materials is vital to Cooper’s business. And, in light of the Appellants’ prior violation of a protective order, Cooper’s proactive steps in this matter were reasonable. AFFIRMED.

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