Evonik Degussa GmbH v. Materia Inc.

Filing 776

OPINION regarding appeal of magistrate judge decision 706 . Signed by Judge Noel L. Hillman on 12/14/16. (bkb)

UNITED STATES DISTRICT COURT
DISTRICT OF DELAWARE

EVONIK DEGUSSA GMBH,
Plaintiff,
v.
MATERIA, INC.,
Defendant.

APPEARANCES:
REED SMITH LLP
By: Eric J. Evain, Esq.
1201 Market Street, Suite 1500
Wilmington, Delaware 19801
Counsel for Plaintiff
MORRIS, NICHOLS, ARSHT & TUNNELL
By: Jack B. Blumenfeld, Esq.
Thomas C. Grimm, Esq.
1201 N. Market Street
P.O. Box 1347
Wilmington, Delaware 19899
and
NIXON PEABODY
By: Jason C. Kravitz, Esq.
Gina M. McCreadie, Esq.
100 Summer Street
Boston, Massachusetts 02110
Counsel for Defendant

Civ. No. 09-636 (NLH/JS)
OPINION

HILLMAN, District Judge:
Plaintiff Evonik appeals Magistrate Judge Schneider’s order
granting in part and denying in part Evonik’s Motion for
Sanctions and Relief Due to Spoliation.

For the reasons stated

herein, the order will be affirmed in its entirety.
I.
Evonik arguably won the motion that is the subject of this
appeal insofar as Judge Schneider did sanction Materia for
belatedly producing one particular email and other documents.
Where Evonik disagrees with Judge Schneider, however, is the
seriousness of Materia’s failure, and Evonik therefore argues
that the sanction imposed was too lenient.
The crux of Judge Schneider’s decision was his rejection of
Evonik’s assertions that Materia or its attorneys acted in bad
faith.

In particular, Judge Schneider stated in his oral

opinion, “[t]he Court simply does not believe [that] defense
counsel deliberately withheld a relevant document, defense
counsel manipulated their firm’s computer system to remove the
subject e-mail, and Nolan perjured himself in his March 16, 2016
Declaration.

Plaintiff’s conspiracy theory is simply too far-

fetched for the Court to credit.” (Transcript, p. 10)
However, Judge Schneider did conclude that, while not done
in bad faith, Materia’s “discovery conduct [with regard to the
specific issues presented in the motion] leaves a lot to be
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desired.” (Transcript, p. 13)

Judge Schneider observed that

Materia should have, on more than one occasion, reviewed its
production for completeness, and did not.

Accordingly, Judge

Schneider held that Materia violated Fed. R. Civ. P. 26(g), and
awarded Evonik attorneys fees it incurred due to the late
production and allowed Evonik additional discovery.
Evonik now argues it is entitled to more.

Specifically,

Evonik argues that Judge Schneider should have ruled that: (a)
the belatedly produced documents could not be used by Materia at
trial, and (b) Evonik is entitled to an adverse inference jury
instruction.
II.
A district court judge will only reverse a magistrate
judge’s decision on pretrial matters if it is “clearly erroneous
or contrary to law.” 28 U.S.C. § 636(b)(1)(A); Fed. R. Civ. P.
72(a); L. Civ. R. 72.1(c)(1)(A).
III.
Evonik asserts that Judge Schneider made three specific
errors.
First, it asserts that Judge Schneider “converted” Evonik’s
spoliation motion into a discovery motion under Rule 37, and
then argues that Rule 37 requires-- as opposed to permits-- the
Court to preclude Materia from relying on the belatedly-produced

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documents at trial.

The undersigned rejects the premise of this

argument.
There is no basis in the record for concluding that Judge
Schneider “converted” the motion.

He did not.

He rejected

Evonik’s spoliation argument because spoliation requires a
finding of bad faith, and then very clearly imposed sanctions
pursuant to Fed. R. Civ. P. 26, not Fed. R. Civ. P. 37.
Second, Evonik asserts that Magistrate Judge Schneider
erred when he stated that a subpoena is not a Court order. (See
Transcript, p. 16)

This argument fails because, even assuming

arguendo that Judge Schneider misstated the law as to this
discreet issue, such conclusion was not integral to the judge’s
decision.

Even if Materia did violate a subpoena / court order

when it failed to produce all responsive documents, the
fundamental point remains that Judge Schneider found that the
violation was not willful, nor in bad faith, but rather
inadvertent.
Lastly, Evonik reasserts the arguments it made before
Magistrate Judge Schneider that Materia’s conduct evidences bad
faith.

Judge Schneider addressed this argument, considered all

of the record evidence, and concluded that there was
insufficient evidence to support Evonik’s “conspiracy theory.”
(Transcript, p. 10)

Judge Schneider’s findings in this regard

were not clearly erroneous.
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IV.
For the foregoing reasons, Magistrate Judge Schneider’s
Order of May 20, 2016 will be affirmed.
An appropriate order accompanies this opinion.

Dated: December 14, 2016
At Camden, New Jersey

___s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.

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