Court Opinion

ID: 5128652
Source: CourtListenerOpinion
Date Created: 2021-11-23 14:01:53.827788+00
Date Added: 2024-06-11T08:23:07.793093
License: Public Domain

In the United States Court of Federal Claims
                                           No. 11-130C

                                     (Filed: November 22, 2021)

                                               )
 RETURN MAIL, INC.,                            )       Reconsideration of discovery sanctions; in
                                               )       absence of hardship, required payment of
                        Plaintiff,             )       sanctions amount
                                               )
        v.                                     )
                                               )
 UNITED STATES,                                )
                                               )
                        Defendant.             )
                                               )

       Lee L. Kaplan, Smyser Kaplan & Veselka, L.L.P., Houston, Texas, for plaintiff. With
him on the briefs was Douglas H. Elliott, Elliott Law PLLC, Bellaire, Texas.

        Shahar Harel, Trial Attorney, Commercial Litigation Branch, Civil Division, United
States Department of Justice, Washington, D.C., for defendant. With him on the briefs were
Brian M. Boynton, Acting Assistant Attorney General, Gary L. Hausken, Director, and Rachel
Hicks, Attorney, Commercial Litigation Branch, Civil Division, United States Department of
Justice, Washington, D.C., as well as Rebecca Harker Duttry, Attorney, and Stephan J.
Boardman, Attorney, United States Postal Service, Washington, D.C.

                                     OPINION AND ORDER

       LETTOW, Senior Judge.

        Pending before the court in this patent action is plaintiff Return Mail’s motion to require
prompt payment of awarded costs, see Pl.’s Mot. for Prompt Payment, ECF No. 188, as well as
the United States’ motion for reconsideration, see Def.’s Mot. for Recons., ECF No. 189, and in
the alternative, motion to stay payment, see Def.’s Cross-Motion and Resp. (“Def.’s Cross-
Mot.”), ECF No. 190. These motions stem from Return Mail’s previous motion to preclude the
government’s use of withheld documents and request for monetary sanctions, see ECF No. 155,
which the court granted in part and denied in part, see Return Mail, Inc. v. United States, 153
Fed. Cl. 718 (Fed. Cl. 2021). In that decision, the court determined that sanctions against the
government were warranted for its delayed disclosure of requested and relevant documents. Id.
at 723. While the court did not preclude the use of the documents as sought by plaintiff, the
court did impose sanctions on the government in the form of reopening discovery and awarding
plaintiff “its fees and expenses for submitting its motion for sanctions and one-third of its
attorney time and all of the expert time for review of the documents disclosed on March 24 and
29, 2021.” Id. 1

        The court awarded $40,207.25 to plaintiff after minimal disagreement between the
parties. Order of October 1, 2021, ECF No. 181. The parties now disagree over when payment
of the awarded $40,207.25 must be made and whether it should be made at all. Plaintiff
contends that no conditions were placed on the recovery and that the government must be
required to make prompt payment of the sanctions award. See Pl.’s Mot. at 2. In contrast, the
government seeks to have the court’s sanctions award overturned via a motion for
reconsideration and in the alternative seeks to stay payment of the sanctions award until the end
of the case, which it suggests is necessary to preserve an appeal on the issue. See Def.’s Mot. for
Recons.; Def.’s Cross-Mot. The parties have completed briefing. See Pl.’s Reply to Mot. for
Prompt Payment, ECF No. 192; Def.’s Reply to Mot. for Recons., ECF No. 195-1; Def.’s Reply
to Mot. to Stay Payment, ECF No. 194. The motions are ready for disposition. For the reasons
stated, defendant’s motion for reconsideration is GRANTED IN PART, plaintiff’s motion for
prompt payment is GRANTED, and defendant’s motion for a stay of payment is DENIED.

                                       BACKGROUND

         This case began on February 28, 2011, over ten years ago, when plaintiff Return Mail,
Inc. filed suit in this court alleging patent infringement by the United States Postal Service of
U.S. Patent No. 6,826,548 (“the ‘548 patent”). Compl. ¶ 1, ECF No. 1. In due course, the
government provided its initial disclosures as required by Rule 26 of the Rules of the Court of
Federal Claims (“RCFC”). Those disclosures identified “Brent A. Raney, USPS Manager . . . as
a person likely to have discoverable information on the general subjects of OneCodeACS®
service development and operation; and Postal Automated Redirection Service (PARS) system
engineering.” Def.’s Mot. for Recons. at 2 (internal quotations omitted). Immediately thereafter,
Return Mail propounded its first set of requests for production of documents, seeking among
other things: “[a]ll documents and things that relate[d] to the Accused System and/or the
Accused Method, including but not limited to functional specifications, design documents,
database descriptions, schematics, datasheets, source code, and electronic mail.” Pl.’s Reply to
Mot. to Preclude, Ex. 1 at 8, ECF No. 159-1. Plaintiff also requested “[a]ll other documents and
communications on which [the government] relie[d] in support of any of [its] defenses or
counterclaims in this action.” Id. at 16. To both requests, the government agreed to provide
responsive non-objectionable documents. No documents were provided from Mr. Raney.

       Thereafter, the case was stayed when the government petitioned the Patent Trial and
Appeal Board (“PTAB”) to institute a covered business method review of the ’548 patent. See
Order of October 21, 2014, ECF No. 83. The stay was lifted on September 5, 2019, see Order of
September 5, 2019, ECF No. 108, after extensive litigation before the PTAB, the United States

       1
         This award was partially contingent on plaintiff having to take further depositions after
reviewing the withheld documents. If no deposition resulted then “compensation for attorney
time spent reviewing the belated production w[ould] be reduced to 10 percent and compensation
for expert time spent reviewing the documents w[ould] be reduced to 25 percent.” Return Mail,
153 Fed. Cl. at 723.

                                                 2
Court of Appeals for the Federal Circuit, and the United States Supreme Court, which ultimately
invalidated the PTAB’s review on procedural grounds, see Return Mail, Inc. v. United States
Postal Serv., --- U.S. ---, 139 S. Ct. 1853, 1867 (2019) (“[A] federal agency is not a ‘person’ who
may petition for post-issuance review under the [America Invents Act].”).

         Once the case before this court resumed, Return Mail served its second set of requests for
production on January 8, 2021. See Def.’s Mot. for Recons., Ex. A, ECF No. 189-1. The second
set of requests for production asked among other things for “[a]ll documents and
communications concerning the development of Intelligent Mail barcode” and “[a]ll documents
and communications related to time spent, expense incurred, and investment in the development
of each Accused System and/or Accused Method.” Def.’s Resp. to Pl.’s Mot. to Preclude, Ex. D
at 6, 7, ECF No. 158-7. In response to these requests, defendant initially produced
approximately 3,000 documents between February 24 and 25, 2021. Discovery proceeded and
depositions were taken. On March 24 and 29, 2021—the last days of discovery—defendant
produced almost 50,000 pages of material, Pl.’s Mot. to Preclude at 1, ECF No. 155, which it
stated to be emails of Brent Raney, the Postal Service manager the government had identified
years prior as likely to have discoverable information, see Def.’s Mot. for Reconsid. at 5. 2

        Return Mail subsequently moved to preclude the government “from making any use of”
the documents produced at the end of March 2021. Pl.’s Mot. to Preclude at 3. In its reply brief
to its motion to preclude, Return Mail alternatively requested “an award of attorneys’ fees, expert
fees, and costs incurred.” Pl.’s Reply to Mot. to Preclude at 8, ECF No. 159. The court held that
“[d]isclosing such a large amount of documents after both parties’ experts had been deposed ‘not
only violated the requirements for timely discovery under the [c]ourt’s rules, it also prevented
meaningful depositions, prejudiced both opposing counsel and the witness, and necessitate[d]
another round of depositions,’” Return Mail, 153 Fed. Cl. at 722 (quoting Bowman Constr. Co. v.
United States, No. 18-1822, 2020 WL 1970546, at *5 (Fed. Cl. April 23, 2020)). As a result, the
court reopened discovery for sixty days and awarded Return Mail “its fees and expenses for
submitting its motion for sanctions and one-third of its attorney time and all of the expert time
for review of the documents disclosed on March 24 and 29, 2021. In addition, the court . . .
award[s] plaintiff all costs and expenses for the depositions that [would be] taken during the
extended discovery period.” Id. at 723. In the event Return Mail opted to not depose Mr. Raney,
“compensation for attorney time spent reviewing the belated production w[ould] be reduced to
10 percent and compensation for expert time spent reviewing the documents w[ould] be reduced
to 25 percent.” Id.

        Return Mail did not depose Mr. Raney and submitted its bill of costs for $41,882.25. See
Pl.’s Bill of Costs at 1, ECF No. 170. The government objected to three line-items of Return
Mail’s costs, two of which the government stated did not reflect the reduction in fees to 10
percent and one that reflected time spent by counsel discussing the case with their clients; the
total disputed amount was $1,675. Def.’s Objections to Pl.’s Bill of Costs at 2-3, ECF No. 174.
Return Mail accepted the reduction, see Pl.’s Resp. to Def.’s Objections, ECF No. 176, and the

       2
        The documents existed “pre-2002” and were in defendant’s possession at the time of the
2011 and 2021 requests. Def.’s Mot. for Recons. at 11.

                                                 3
court entered an order awarding plaintiff $40,207.25 as a discovery sanction, Order of October 1,
2021. The court did not set a deadline for payment.

         Thereafter, Return Mail filed a motion to require prompt payment of the discovery
sanctions, stating that the government had declined to pay the sanctions because the order was
not a final, appealable judgment. Pl.’s Mot. at 2. Subsequently, defendant filed a motion for
reconsideration of the sanctions award, arguing (1) that the 2021 production was in response to a
new request, not a supplementation of the 2011 production and therefore was not a violation of
RCFC 26, (2) that the court’s reliance on Bowman was manifest legal error, and (3) that the
timing of the production was harmless. See generally Def.’s Mot. for Recons. Defendant also
filed a response to Return Mail’s motion for prompt payment along with a cross-motion to stay
payment in the event its motion for reconsideration is denied. See Def.’s Cross-Mot. Defendant
argues that, if the motion for reconsideration is denied, delayed payment is necessary to preserve
the government’s appeal on the issue because the order is not a final decision under Cunningham
v. Hamilton County, Ohio, 527 U.S. 198, 210 (1999). Id. at 3-4.

                                STANDARDS FOR DECISION

        The court’s ruling on May 26, 2021, imposing discovery sanctions against the
government, was interlocutory as it adjudicated fewer than all of the claims of the case, making
RCFC 54(b) the governing rule. See Return Mail, 153 Fed. Cl. at 723. 3 Under Rule 54(b), “any
order or other decision, however designated, that adjudicates fewer than all the claims . . . does
not end the action as to any of the claims or parties and may be revised at any time before the
entry of a judgment adjudicating all the claims and all the parties’ rights and liabilities.” RCFC
54(b); see Marconi Wireless Tel. Co. v. United States, 320 U.S. 1, 47-48 (1943) (A court has
power “at any time prior to entry of its final judgment . . . to reconsider any portion of its
decision and reopen any part of the case.”); John Simmons Co. v. Grier Bros. Co., 258 U.S. 82,
88 (1922) (“If [an order is] interlocutory, the court at any time before final decree may modify or
rescind it.”). The rule reflects the precept that “[a]t an interlocutory stage, the common law
provides that the court has power to reconsider its prior decision on any ground consonant with
application of the law of the case doctrine.” Wolfchild v. United States, 68 Fed. Cl. 779, 785
(2005). In such circumstances, “the strict rules governing motions to amend and alter final
judgments under Rule 59 do not apply.” Pacific Gas & Elec. Co. v. United States, 114 Fed. Cl.
146, 148 (2013) (internal quotations and citations omitted). Rather, the court “possesses wide
discretion to depart from or stand by it, whatever ‘justice requires.’” E & I Glob. Energy Servs.,
Inc v. United States, 152 Fed. Cl. 524, 533 (2021) (quoting Greene v. Union Mut. Life Ins. Co. of
Am., 764 F.2d 19, 22 (1st Cir. 1983) (Breyer. J.)).

        “Courts must address reconsideration motions with ‘exceptional care.’” IAP Worldwide
Servs., Inc. v. United States, 141 Fed. Cl. 788, 799 (2019) (quoting Carter v. United States, 207
Ct. Cl. 316, 318 (1975)). In effect, the court “may grant a motion for reconsideration when there
has been an intervening change in the controlling law, newly discovered evidence, or a need to
correct clear factual or legal error or prevent manifest injustice.” Biery v. United States, 818

       3
         The government’s motion for reconsideration errs insofar as it relies on RCFC 59(a)(1)
and (b), which applies to motions to alter or amend final judgments.

                                                 4
F.3d 704, 711 (Fed. Cir. 2016) (internal quotations and citations omitted). The court must
consider the motion while remaining mindful that a motion to reconsider “is [not] intended to
give an unhappy litigant one additional chance to sway the [court].” Weaver-Bailey Contractors,
Inc. v. United States, 20 Cl. Ct. 158, 158 (1990) (citation omitted). The moving party “may not
merely reassert arguments that ‘were previously made and carefully considered by the court.’”
Haggart v. United States, 133 Fed. Cl. 568, 573 (2017) (quoting Whispell Foreign Cars, Inc. v.
United States, 106 Fed. Cl. 777, 782 (2012) (additional citations omitted)).

                                           ANALYSIS

                                 A. Motion for Reconsideration

        The government seeks reconsideration of the court’s decision to impose sanctions on the
government for its delayed production of nearly 50,000 pages of documents. See generally
Def.’s Mot. for Recons. Defendant first argues that it did not violate RCFC 26 when it did not
produce Mr. Raney’s emails until 2021; rather, the government contends that the production was
not a supplementation of its prior production under the 2011 requests but was instead a new and
timely production in response to the 2021 requests. Id. at 9. The government emphasizes the
different language in the two requests, suggesting that the 2021 production requests were
“materially different” from the 2011 requests because they sought “development” information
about a specific barcode as opposed to “design and operation” information pertaining to the
whole system. Id. at 4.

        The court reiterates what it already determined to be factually accurate: “[w]hile
plaintiff’s second request for production may have encompassed the documents at issue,
defendant already had an obligation to produce these documents under plaintiff’s 2011 request
for production.” Return Mail, 153 Fed. Cl. at 722. The 2011 production requests sought “[a]ll
documents . . . that relate to the [a]ccused [s]ystem . . . including but not limited to functional
specifications, [and] design documents,” Pl.’s Reply to Pl.’s Mot. to Preclude, Ex. 1 at RFP. No
7, as well as other documents on which the government relied “in support of any of [its] defenses
or counterclaims.” Id. at RFP No. 20. Both requests would have encompassed the emails that
were ultimately produced in 2021 from the Postal Service manager. While broad in scope, both
requests put the government on notice that it needed to investigate documents in their
employees’ possession that may have been responsive, particularly of those employees it had
disclosed as potentially having pertinent information. The 2011 requests encompassed these
documents, the government was under an obligation to provide their production, and the fact that
the documents were also responsive to the 2021 requests does not obviate this obligation.
Accordingly, the court maintains its prior determination that the government violated its duty to
supplement under RCFC 26.

         The government next argues that the court misapplied Bowman Constr. Co. v. United
States, 2020 WL 1970546, at *1 (Fed. Cl. April 23, 2020). The government contends that
Bowman is distinguishable from this case because no depositions were sought either before or
after the production of the documents at issue. Def.’s Mot. for Recons. at 15. This argument
fails to consider the key problem created by the government’s delayed production: Return Mail
could not know if it needed to depose Mr. Raney until it had received and reviewed the

                                                 5
documents at issue. At the time of its ruling on sanctions, the court was conscious of the
possibility that a deposition of Mr. Raney might not be warranted, and it accounted for that
possibility by conditioning the amount of the discovery sanctions on the occurrence or not of his
deposition, see Return Mail, 153 Fed. Cl. at 723. The lack of further depositions does not negate
the fact that the government had a duty to disclose those documents to plaintiff so it could make
a fully informed decision as to whether to conduct Mr. Raney’s deposition or any other
depositions within the period for discovery. The fact that Return Mail did not conduct further
depositions affects only the amount of sanctions warranted, not whether sanctions themselves are
warranted. See Bowman, 2020 WL 1970546, at *5 (granting sanctions “even though the
untimely production occurred during the discovery period”). 4

        The government also urges the court to reconsider the award for Return Mail’s time spent
reviewing the produced documents, citing the Bowman court which declined to compensate for
tasks that plaintiff’s counsel would have had to perform regardless of defendant’s lapse. Id. at
*4. The court maintains that plaintiff is entitled to an award for the time spent reevaluating
whether additional depositions were necessary as this work was additional to what would have
been necessary if the documents had been provided in a timely manner. It nonetheless agrees
that the time spent reviewing the documents themselves would have been necessary regardless.
To insure that the award does not encompass review time as such, the court further reduces the
award from one-third of attorney time and all of the expert time for review of the documents to
twenty percent of the time spent reviewing the documents. That reduction will explicitly focus
the sanction to account for the time needed to evaluate the need for further depositions, resulting
in an award of $8,041.45.

                                     B. Timing of the Payment

        The parties also disagree as to when the payment of the sanctions award must be made.
Plaintiff contends payment should be made promptly, while defendant seeks a stay of the award
until the conclusion of the case. Defendant claims that if it is required to make immediate
payment it will lose its ability to appeal the issue. The Supreme Court in Cunningham
anticipated that “in a particular case” a sanctions award could be delayed until the end of trial in
order to “reduce any hardship,” 527 U.S. at 210; see also id. at 211 (Kennedy, J., concurring)
(discussing that “[i]f the trial court declines to stay enforcement of the order and the result is an
exceptional hardship itself likely to cause an injustice,” an appeal could be sought (emphasis
added)), suggesting that staying payment of a sanctions award may be warranted in some but not
all cases. Courts have rejected the notion that the interlocutory status of an award is enough to
warrant a stay without more harm. See Blemaster v. Sabo, 2:16-CV-04557, 2018 WL
10322071, at 2 (D. Ariz. Mar. 1, 2018) (declining to stay sanctions where parties did not argue

       4
         This rationale also extends to the government’s argument that Return Mail was not
harmed or prejudiced by the delayed disclosure. The fact that additional depositions ultimately
were not warranted is not the relevant question. Return Mail was harmed by the delayed
disclosure of nearly 50,000 pages of documents in the final several days of scheduled discovery
because it prevented them from making timely decisions as to whether or not additional
depositions were necessary. The result of the determination is irrelevant while the ability to make
the determination is key to a fair litigation process.

                                                  6
hardship but instead wrongly contended that the “payment [was] not required at [the] time
because a discovery sanction is not an immediately appealable ‘final decision’”). In support of
its motion to stay, the government does not point to any harm it would suffer from immediate
payment other than its allegation that it would lose its ability to later appeal the decision or else
be “required to face a contempt of court citation.” Def.’s Cross Mot. at 4 n.3. The government
is incorrect in its notion that immediate payment would result in it losing the ability to appeal the
decision on sanctions; various courts have recognized that immediate payment of a sanctions
award does not constitute irreparable harm or otherwise satisfy the collateral order doctrine,
necessarily suggesting that no rights—including the right to appeal—are lost. See, e.g., Nat’l
Ass’n of Crim. Def. Laws., Inc. v. United States Dept. of Just., 182 F.3d 981, 985 (D.C. Cir.
1999) (finding no irreparable harm where there was no showing that the party awarded costs
would be “unable to repay the fees if the award [wa]s later reduced or overturned”); LaTele
Television, C.A. v. Telemundo Commc’ns Grp., LLC, 2016 WL 6471201, at *3 (11th Cir. May,
26, 2016) (declining to review an award of sanctions under the collateral order doctrine). The
government’s right to an appeal will not be affected by prompt payment of the sanctions award,
and the government has made no showing that Return Mail will be unable to repay the awarded
costs in the event the award is reduced or overturned. Where no other harm has been shown, the
court sees no reason to stay payment of the sanctions award. As such, the government’s motion
for a stay is denied, and the plaintiff’s motion for prompt payment is granted.

                                         CONCLUSION

        In conclusion, the court GRANTS IN PART defendant’s motion for reconsideration. To
account for the time spent by plaintiff reevaluating whether further depositions were warranted
but subtracting for time spent doing work that would have otherwise been done, 20% of the
submitted costs are awarded to plaintiff, totaling $8,041.45. In addition, the court GRANTS
plaintiff’s motion for prompt payment and DENIES defendant’s motion for a stay of the
sanctions award. The government shall make payment by December 23, 2021. 5

       It is so ORDERED.

                                                      s/ Charles F. Lettow
                                                      Charles F. Lettow
                                                      Senior Judge

       5
        Plaintiff sought a ten-day deadline for payment, see Pl.’s Mot. at 2, but considering the
government’s internal processes, see Def.’s Cross-Mot. at 5, a more lenient allowable time of a
month is warranted.

                                                  7