Prism Technologies v. Adobe Systems Incorporated et al
MEMORANDUM AND ORDER - National Instruments motion for sanctions (Filing No. 348 ) is granted in part, as follows: 1) The Court awards National Instruments $1,108.17 in travel expenses; 2) The Court awards National Instruments $2,116.50 for attorney fees; and 3) Prism will pay the total amount of $3,224.67 to National Instruments by January 6, 2012. Ordered by Senior Judge Lyle E. Strom. (GJG)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
PRISM TECHNOLOGIES, LLC,
ADOBE SYSTEMS, INCORPORATED, )
AUTODESK, INC.; McAFEE, INC., )
CORPORATION; SAGE SOFTWARE,
INC., SYMANTEC CORPORATION;
THE MATHWORKS, INC., and
TREND MICRO INCORPORATED,
MEMORANDUM AND ORDER
This matter is before the Court on the motion for
sanctions filed pursuant to Federal Rule of Civil Procedure 30(g)
by defendant National Instruments Corporation (“National
Instruments”) against plaintiff Prism Technologies, LLC (“Prism”)
(Filing No. 348), with accompanying brief and index of evidence
(Filing Nos. 349 and 350).
Prism filed an opposing brief with
index of evidence (Filing Nos. 388 and 389), to which National
Instruments filed a reply brief with index of evidence (Filing
Nos. 398 and 399).
With leave of the Court, Prism then filed a
surreply brief opposing the motion (Filing No. 424).
reviewing the parties’ submissions, the Court will partially
grant National Instruments’ motion.
The parties’ dispute centers around the cancelled
deposition of National Instruments employee Whitney Knox, which
had been scheduled for Wednesday, October 26, 2011, at 9:00 a.m.,
in Austin, Texas.
Because the time line leading up to the
cancelled deposition is of some importance, the Court will review
the plans for the deposition in detail.
Prism served a request for production of documents on
defendant National Instruments on July 22, 2011.
On October 11,
2011, Prism gave notice to National Instruments that it intended
to depose National Instruments’ Rule 30(b)(6) witness on Monday,
October 24, 2011, at 1:00 in Palo Alto, California, and its
employee, Whitney Knox, on Tuesday, October 25, 2011, also at
1:00 in Palo Alto (Ex. 2 and 3, Filing No. 350).
In an October
13 email, Prism asked National Instruments to identify who the
Rule 30(b)(6) witness would be, and, in addition, asked that the
documents already requested be produced “at least one week in
advance” of the depositions (Ex. 4, Filing No. 350, at 6).
With regard to the corporate witness, in an email dated
Tuesday, October 18, 2011, National Instruments for the first
time stated that Whitney Knox “may be offered” as National
Instruments’ Rule 30(b)(6) witness for “certain topics” (Ex. 4,
Filing No. 350, at 3).
In an exchange of emails, the place,
date, and time for the Whitney Knox deposition were changed, and
the deposition was ultimately set for Wednesday, October 26,
2011, at 9:00 a.m. at National Instruments’ offices in Austin,
In an October 19 email, National Instruments verified
that “the documents we are producing today are relevant and
responsive technical documents relating to the accused products
located after a reasonable search, including documents responsive
to your 30(b)(6) topics subject to our ensuing objections.
are not at this time searching or producing custodian’s e-mails”
(Ex. 4, Filing No. 350, at 2).
This partial production of
documents, then, did occur one week in advance of the scheduled
October 26 deposition, as requested by Prism (Ex. 6, Filing No.
In a responsive email that same day, October 19, Prism
It does not appear that we can
resolve our differences regarding
the scope of Adobe1 and NI’s
document production at this time.
Nevertheless, Prism will proceed
with the depositions of Vivek Misra
[of Adobe] and Whitney Knox on
October 26 as you have proposed,
reserving its right to seek further
depositions of these individuals at
a later date should Adobe or NI
fail to produce documents relevant
Adobe Systems, Incorporated (“Adobe”) and National
Instruments are represented by the same counsel, and many of the
emails documenting the Whitney Knox deposition also discuss Adobe
to their depositions in a timely
manner prior to the 26th.
(Ex. 4, Filing No. 350, at 2)(emphasis added).
On Friday, October 21, in the late afternoon, regarding
the Rule 30(b)(6) witness, National Instruments emailed to Prism,
stating more unequivocally than it had earlier, “Whitney Knox
will be offered as a 30(b)(6) witness for NI” for certain topics
(Ex. 14, Filing No. 389, at 2).
That same Friday evening,
October 21, 2011, Prism confirmed by email, “To accommodate Mr.
Knox’s schedule, we will go ahead and take his deposition at
National Instruments’ offices, as you proposed” (Ex. 5, Filing
No. 350, at 2).
On Monday, October 24, 2011, at 12:32 p.m., Prism sent
an email to National Instruments’ counsel –- or, at least,
attempted to send an email –- cancelling the Whitney Knox
Prism now states, “It is unclear whether NI’s
counsel received this message, as Prism’s counsel was suffering
from a firm-wide computer networking problem that day, which
prevented certain e-mails from being sent out of the firm”
(Filing No. 388, at 9).
“Upon learning of this problem, however,
Prism’s counsel telephoned NI’s counsel at around 1:15 p.m. on
October 24 and relayed the message to NI’s counsel that Mr.
The times given for emails are California time, unless
otherwise stated, because the Prism counsel and National
Instruments counsel involved in the email exchanges are located
Knox’s deposition was being postponed” (Filing No. 388, at 9).
At 1:27 p.m., Prism resent the 12:32 email (Ex. 18, Filing No.
389, at 2).
In the 12:32 email, Prism stated,
[W]e have reviewed National
Instruments’ production from last
week and have found the production
to be severely deficient. . . .
Because of these continuing
deficiencies in National
Instruments’ document production,
Prism cannot reasonably prepare for
Mr. Knox’s individual and 30(b)(6)
deposition on Wednesday. We are
therefore taking Mr. Knox’s
deposition off calendar for now
until such time as National
Instruments complies with its
obligation to provide the relevant
documents Prism needs in order to
adequately prepare for the
(Ex. 16, Filing No. 389, at 2).
Meanwhile, around 1:00 p.m. on October 24, before
National Instruments’ counsel received either the 12:32 email or
the 1:15 phone call cancelling the deposition, National
Instruments counsel Tamara Frazier boarded a flight from San
Jose, California, to Austin, Texas.
Ms. Frazier intended to
spend Tuesday, October 25, preparing with Whitney Knox for the
deposition scheduled for the next day, Wednesday, October 26.
Later that same evening, Monday, October 24, 2011,
responding to the 12:32 email, National Instruments emailed to
You are blatantly reneging on our
agreement at the last minute. . . .
As for your belated allegations of
deficiency, we note that our
production of NI documents amounts
to over 3400 pages and includes
design documents, specifications,
meeting memos, and user manuals,
all of which are directly relevant
to the topics for which Mr. Knox is
designated to testify.
(Ex. 9, Filing No. 350, at 2).
National Instruments stated,
“[W]e insist Prism proceed with the deposition of Mr. Knox as
scheduled on October 26 . . .” (Id.).
In response, on Tuesday, October 25, at 12:37 p.m.
Austin time, Prism emailed to National Instruments, “Prism is not
proceeding with the depositions of Eric Wilde and Whitney Knox
this week . . .” (Ex. 20, Filing No. 389, at 2).
With respect to your allegation
that Prism is reneging on a prior
agreement, that allegation is
simply untrue. We never agreed to
depose either Mr. Wilde [from
Adobe] or Mr. Knox as 30(b)(6)
witnesses this week. Indeed,
despite my repeated requests that
you identify who Adobe and NI would
be designating as 30(b)(6)
witnesses, you did not provide any
such designations until the end of
the day last Friday.
(Ex. 20, Filing No. 389, at 2).
National Instruments counsel
Tamara Frazier flew back to California that afternoon, after
meeting with Whitney Knox in Austin.
Federal Rule of Civil Procedure 30(g).
Federal courts are imbued with inherent powers that
“are ‘governed not by rule or statute but by the control
necessarily vested in courts to manage their own affairs so as to
achieve the orderly and expeditious disposition of cases.’”
Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991) (quoting Link v.
Wabash R. Co., 370 U.S. 626, 630–631 (1962)).
“Because of their
very potency, inherent powers must be exercised with restraint
A primary aspect of that discretion is the
ability to fashion an appropriate sanction for conduct which
abuses the judicial process.”
Id. at 44-45 (citation omitted).
While the “American Rule” requires that parties to a
lawsuit are generally responsible for their own attorney fees,
exceptions do exist.
Id. at 45.
For example, a court may award
attorney fees as part of a sanction “when a party ‘shows bad
faith by delaying or disrupting the litigation . . . .’”
46 (quoting Hutto v. Finney, 437 U.S. 678, 689 n.14 (1978)).
while the narrow exceptions to the
American Rule effectively limit a
court’s inherent power to impose
attorney’s fees as a sanction to
cases in which a litigant has
engaged in bad-faith conduct or
willful disobedience of a court’s
orders, many of the other
mechanisms permit a court to impose
attorney’s fees as a sanction for
conduct which merely fails to meet
a reasonableness standard. Rule
11, for example, imposes an
objective standard of reasonable
inquiry which does not mandate a
finding of bad faith.
Id. at 47.
Federal Rule of Civil Procedure 30(g) states,
A party who, expecting a deposition
to be taken, attends in person or
by an attorney may recover
reasonable expenses for attending,
including attorney’s fees, if the
noticing party failed to:
(1) attend and proceed with the
deposition . . . .
Fed. R. Civ. P. 30(g)(1).
This rule does not require that the
noticing party acted in “bad faith,” although bad faith may play
a part in the exercise of the court’s discretion in making an
“In deciding a Motion for Sanctions, the court should
consider all the circumstances, such as whether the failure was
inadvertent or in bad faith, when setting proper sanctions.”
Barrett v. Brian Bemis Auto World, 230 F.R.D. 535, 537 (N.D. Ill.
Thus, Prism’s contention that it did not act in bad
faith, while relevant, would not necessarily allow it to escape
from the sanctions allowed by Rule 30(g).
Other rules do require a finding of bad faith. For
example, Rule 56(h) states, “If satisfied that an affidavit or
declaration under this rule is submitted in bad faith or solely
for delay, the court -- after notice and a reasonable time to
respond -- may order the submitting party to pay the other party
the reasonable expenses, including attorney’s fees, it incurred
as a result.” Fed. R. Civ. P. 56(h).
National Instruments’ Motion for Sanctions.
National Instruments asks the Court “to sanction
Prism’s counsel’s bad faith conduct for noticing a deposition and
thereafter refusing to attend” (Filing No. 348, at 2).
Instruments “seeks reimbursement of the fees and costs incurred
in connection with flying its counsel from California to Texas
for the agreed-upon deposition of an NI employee and witness, Mr.
Whitney Knox, which did not go forward due to Prism’s unjustified
eleventh hour refusal to attend and proceed” (Filing No. 349, at
National Instruments seeks reimbursement of the travel costs
for Tamara Frazier, counsel; attorney fees for the time spent in
preparation for the trip; attorney fees for the travel time when
Ms. Frazier could not work otherwise; attorney fees for preparing
Whitney Knox for the deposition; attorney fees that would have
been earned had the deposition taken place; and attorney fees for
the preparation of this motion and accompanying briefs and
indices of evidence.
Prism objects to the motion for several
reasons, which are addressed below.
Notice of the Identity of the Rule 30(b)(6)
Prism claims that it could not adequately prepare for
the deposition because of a delay in learning the identity of
National Instruments’ corporate witness.
While Prism states that
“NI delayed until Friday night on October 21 to provide this
information [that Whitney Knox would be the Rule 30(b)(6)
witness],” National Instruments had given notice of this
possibility as early as Tuesday, October 18 (Ex. 4, Filing No.
350, at 3).
Nevertheless, if Prism reasonably calculated that it
would not have time to prepare for the Rule 30(b)(6) aspect of
the deposition by the following Monday, the time to cancel the
deposition was Friday the 21st, not Monday the 24th.
statement that it had not agreed to the deposition of Whitney
Knox as the Rule 30(b)(6) witness is beside the point.
clearly had agreed, as late as Friday evening after National
Instruments designated Knox as the Rule 30(b)(6) witness, to
continue with the deposition.
Alternatively, Prism could have proceeded with the
deposition of Whitney Knox only as an individual, and postpone
the Rule 30(b)(6) aspect of the deposition.
See Ex. 2 and 3,
Filing No. 350 (two separate deposition notices, one for the
National Instruments Rule 30(b)(6) deposition, and one for the
Whitney Knox deposition, originally scheduled for different
Even Prism claims that as of Friday, October 21, “As
Prism understood it, the deposition of Mr. Knox scheduled for
October 26 was for Mr. Knox in his personal capacity only.”
(Filing No. 388, at 8).
Prism could have proceeded with the
October 26 deposition on those terms.
Production of Documents.
Prism requested that
National Instruments comply with its request for production of
documents at least one week prior to the deposition dates both
for Whitney Knox and for the Rule 30(b)(6) witness for National
Prism reserved the right to recall Knox and the
National Instruments witness if the documents were not produced
as requested prior to the deposition dates.
did, in fact, produce the documents as requested, one week in
Prism claims that it “determined that it could not
proceed with the combined personal and Rule 30(b)(6) deposition
of Mr. Knox on October 26 as proposed by NI because . . . the
production [of documents] was still significantly deficient, and
thus taking Mr. Knox’s deposition at that point would not be
productive” (Filing No. 388, at 8).
This contradicts Prism’s
earlier emailed statement that despite having differences
regarding production of documents, “[n]evertheless, Prism will
proceed with the depositions . . . reserving its right to seek
further depositions of these individuals at a later date should
Adobe or NI fail to produce documents relevant to their
depositions in a timely manner prior to the 26th” (Ex. 4, Filing
No. 350, at 2)(emphasis added).
In addition, Prism complains that “because these
documents were produced in electronic format, Prism had to send
this material to its document review vendor for processing before
the material could be reviewed.
Due to the large volume of these
documents, the processing of these documents took several days .
. .” (Filing No. 388, at 7).
Prism should have taken into
account the document processing time when it gave National
Instruments one week in advance of the deposition as the deadline
for document production.
The Court finds that National Instruments reasonably
relied on Prism’s statement that the deposition would occur
regardless of the parties’ differences regarding document
National Instruments could not have reasonably
expected that it should wait for Prism to complete its document
review and give the green light before National Instruments sent
counsel to Austin to prepare for the deposition.
As noted above, Adobe and
National Instruments are represented by the same counsel, so many
of the emails documenting the Whitney Knox deposition also
discuss Adobe depositions.
[I]t is Adobe and NI who have
engaged in gamesmanship here with
their last-minute document dumps,
their last-minute designations of
30(b)(6) witnesses, their refusal
to produce emails from the files of
witnesses they themselves have
identified as relevant witnesses,
and their attempt to schedule
multiple depositions in multiple
cities on the same day in order to
make it as difficult as possible
for Prism’s counsel to prepare for
and take the depositions.
(Ex. 20, Filing No. 389, at 2).
Here, Prism seems to be
complaining of the difficulties of litigating with multiple
defendants, a situation that was in its own control.
does not place any further importance on the Adobe depositions
for the sake of this motion for sanctions, regardless of Prism’s
allegations of National Instruments’ “improper actions” in
association with Adobe, including a “dump” of “51,000 pages of
documents on Prism relating to the depositions,” when less than a
tenth of those pages were from National Instruments (Filing No.
388, at 11).
Timing of the Cancellation.
Both Prism and
National Instruments cite various other cases considering a
motion for sanctions where the notice of cancellation of a
deposition was given in the day or two before the deposition.
some cases, the court approved sanctions, and in other cases, it
This Court does not see any value to a bright-line rule
that would dictate whether sanctions are allowed, depending on
some pre-ordained number of hours between the cancellation and
the scheduled deposition.
Rather, a case-by-case determination
fits the analysis better, where the Court can determine whether
the moving party could have done anything to mitigate expenses
upon hearing of the cancellation.
In this case, the Court finds it reasonable that
National Instruments would want to prepare Whitney Knox on the
day before the deposition, Tuesday, October 25.
Court finds it reasonable that National Instruments’ counsel
would fly from San Jose to Austin on the day before she was
scheduled to prepare Whitney Knox for the deposition, that is, on
Monday, October 24, 2011.
The Court finds that it would make
little sense for National Instruments’ counsel to incur more
travel costs by staying in Austin a second night, Tuesday, so
that she could go to the scheduled location for the deposition on
Wednesday when Prism plainly communicated on Tuesday that the
deposition was not going to occur.
The Court finds that National
Instruments’ counsel properly mitigated costs by returning to
California on Tuesday, rather than Wednesday, when it was evident
that the deposition would not take place.
Prism argues that it has not acted in
bad faith, because it claims it had good reason for the
cancellation, and that the cancellation was timely made.
Regardless of whether or not Prism acted in good faith, the Court
finds that Prism’s cancellation of the deposition was not timely
made, and National Instruments incurred costs that it would not
have incurred but for the cancellation.
Attorney Fees and Costs.
“As with the award of statutory attorneys’ fees to a
party that prevails on the merits, an award of fees as a sanction
for discovery abuse begins with a lodestar analysis.”
Seavey, No. 08 Civ. 5646, 2009 WL 1598794, at *1 (S.D.N.Y. June
“The court calculates the lodestar by totaling the
number of hours reasonably expended by each attorney multiplied
by the appropriate hourly rate for that attorney.”
reasonable hourly rate is usually the ordinary rate for similar
work in the community where the case has been litigated.”
v. Hunt, 272 F.3d 1042, 1048 (8th Cir. 2001).
“In a case where
the plaintiff does not use local counsel, the court is not
limited to the local hourly rate, if the plaintiff has shown
that, in spite of his diligent, good faith efforts, he was unable
to find local counsel able and willing to take the case.”
National Instruments has
documented $1,108.17 in travel expenses for Tamara Frazier’s
journey from California to Texas.
The Court finds that these
expenses are reasonable and could not have been avoided, given
the timing of the cancellation.
Therefore, Prism will reimburse
National Instruments for these expenses.
National Instruments claims that it
has incurred $25,799 in attorney fees associated with the
National Instruments has provided little
justification for this figure, with only a small chart showing
very little detail as evidence (Ex. 1, Filing No. 399, at 2).
For example, National Instruments states that its request for
fees includes both California counsel and local Nebraska counsel,
but it does not break down the hours indicating how much time was
spent by each.
While the two firms charge different rates, the
difference is not shown in National Instruments’ chart.
As another example, National Instruments states that it
spent 19.8 hours preparing the original motion for sanctions and
supporting filings, for a cost of $5,854.
Yet its reply brief
and affidavit, which somehow required 22.2 hours to prepare, cost
over twice as much – $11,036.
National Instruments does not
provide any explanation for why the reply brief was so much more
expensive than the original brief.
Taking into account the lack
of egregious behavior or bad faith by Prism, the Court finds that
National Instruments has not supported its motion with the
requisite evidence such that the Court would wholly approve its
request for attorney fees, particularly with regard to the
preparation of this motion and accompanying briefs.
However, the Court finds that spending 5.4 hours to
prepare for the session with Whitney Knox, in addition to the 4.3
hours spent in conference with Whitney Knox on Tuesday morning
(presumably before Prism definitively stated via email at 12:37
p.m. Austin time that the deposition would not go on), were
expenses that could not have been avoided.
preparation time was not totally wasted, assuming the Whitney
Knox deposition is rescheduled, some of that time will likely
have to be repeated whenever the deposition does take place.
Thus, the Court will award approximately half the time, 4.8
hours, in attorney fees to National Instruments.
the Court will award fees for the 3.5 hours that National
Instruments’ counsel was traveling and unable to work.
totals 8.3 hours.
Next the Court needs to determine what hourly attorney
billing rate to use, but National Instruments has not given the
Court any way to determine how National Instruments
its hourly rate.
In the absence of guidance from National
Instruments, the Court will follow a recent Nebraska case that
found that hourly attorney billing rates of $175 per hour to $335
per hour were reasonable for a complex patent case in the Omaha,
Kellogg v. Nike, Inc., No. 8:07CV70, 2010 WL
323994, at *1 (D. Neb. January 20, 2010).
In Kellogg, unlike here, the movant “submitted detailed
time sheets showing the respective hours expended and hourly
rates charged by his attorneys . . . produced evidence of
expenses and evidence of the skills and experience of each
attorney,” and “presented affidavits showing that the hourly
rates and hours expended on the litigation are reasonable in the
Omaha, Nebraska area given the complexity of the litigation,
the importance of the issues, the skill of the attorneys, and the
quality of work.”
The Court finds that the middle of this
range, $255 per hour, is a reasonable hourly rate and thus will
allow an award of $2,116.50 for the 8.3 hours of attorney work.
Attorney Fees for the Deposition Itself.
National Instruments requests $5,400 in attorney fees that it
would have incurred if the deposition had taken place as
The Court assumes that National Instruments’ counsel
found some other work to do on Wednesday, October 26, when she
was back in her office in California, so that she did not
sacrifice that day’s work due to the cancellation.
will not award the attorney fees that National Instruments would
have incurred had the deposition taken place as scheduled.
IT IS ORDERED: National Instruments’ motion for
sanctions (Filing No. 348) is granted in part, as follows:
1) The Court awards National Instruments $1,108.17 in
2) The Court awards National Instruments $2,116.50 for
attorney fees; and
3) Prism will pay the total amount of $3,224.67 to
National Instruments by January 6, 2012.
DATED this 29th day of December, 2011.
BY THE COURT:
/s/ Lyle E. Strom
LYLE E. STROM, Senior Judge
United States District Court
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