Olaf Soot Design, LLC v. Daktronics, Inc., et al

Filing 258

OPINION: re: 200 MOTION for Summary Judgment of No Willful Infringement filed by Daktronics, Inc., Daktronics Hoist, Inc., 223 CROSS MOTION for Sanctions Pursuant to 28 USC 1927 filed by Daktronics, Inc., Daktronics Hoist, Inc., 198 MOTION Relief Under Fed. R. Civ. P. Rule 37 filed by Olaf Soot Design, LLC. Defendants' motion for summary judgment is granted. Plaintiff's motion for Rule 37 sanctions is denied. Defendants' cross-motion for sanctions under Section 1927 is denied. IT IS SO ORDERED. (Signed by Judge Robert W. Sweet on 7/17/2018) (ama)

'. ,

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

------------------------------------------x
OLAF SOOT DESIGN, LLC,
Plaintiff,
15 Civ. 5024

(RWS)

- against OPINION
DAKTRONICS, INC. and
DAKTRONICS HOIST, INC.,
Defendants.

-------------------------------------------x
APPEARANCES:

Attorneys for Plaintiff
TROUTMAN SANDERS LLP
875 Third Avenue
New York, NY 10022
By:
James M. Bollinger, Esq.
Timothy P. Heaton, Esq.
Phoenix S. Pak, Esq.
Katherine Harihar, Esq.

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Attorneys for Defendants
BLANK ROME LLP
405 Lexington Ave
New York, NY 10174
By:
Kenneth L. Bressler, Esq.
BLANK ROME LLP
717 Texas Avenue, Suite 1400
Houston, TX 77002
By:
Russel T. Wong, Esq.
Linh Bui, Esq.

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Sweet, D.J.

Defendants Daktronics, Inc. and Daktronics Hoist, Inc.
("Daktronics " or the "Defendants") move for summary judgment on
the issue of wil lf ul infringement, a claim t hat was brought by
Plaintiff Olaf S66t Design, LLC ("OSD" o r the "Plaintiff").
Defendants also move for sanct i ons under 28 U.S.C. Section 1927
in response t o Plaintiff's Rule 37 motion for relief based on
alleged discovery misconduct. For the reasons set forth below,
Defendants' motion for summary judgment is granted. Plaintiff's
motion for Rule 37 sanctions is denied. Defendants' cross -motion
for sanctions under 28 U.S.C. Section 1927 sanctions is denied.

Prior Proceedings

The following factual background is set forth only as
necessary to resolve the instant motions. A comprehensive
factual background detailing the '4 85 Patent infringement
claims, this Court ' s cla im construct i ons , and the denial of
Defendants' summary judgment motion can be found in prior
opin i ons of the Court. See Olaf Soot Design, LLC v. Daktronics,
Inc., 220 F. Supp. 3d 458, 462
denied, No . 15 Civ . 5024

(S .D.N.Y. 2016), reconsideration

(RWS), 201 7 WL 2191612 (S .D.N. Y. May

1

17, 20 1 7). Familiarity with these opinio ns, as well as the facts
of this case , is assumed.

Th e

' 485 Patent covers a winch system designed to move

la rge theatre scenes on and off stage quickly and efficiently ,
replacing the cumbersome counterwe i ght systems that came before
it. Olaf Soot Design, LLC v . Daktr on ics, Inc., 220 F. Supp . at
358.

On June 25 , 2015, Plaintiff, an engineering and design
company spec i alizing in th e performing arts , brought this action
alleging patent infringement as to U.S. Patent No . 6 , 520 ,4 85
("the '4 85 Patent" ) against Defendants, t wo co rp orat i ons engaged
i n the manufacture and sale of theatre rigging equipment and
winch systems .

On October 26 , 2016 , after hearing Plaintiff's motion for
claim construction and Defendants' motion for summary judgment,
the Court construed twelve cla im co nstru ct i ons on the ' 485
Patent and denied Defendants' summary judgment motion on the
issue of non-infringement. Dkt. 72.

On May 17 , 20 17, Defendants' motion for reconsideration on
this Court 's denial of summar y judgment was denied. Dkt. 1 37 .
2

On October 26, 2017, Plaintiff's motion to amend its
complaint to add the claim of willful infringement which is now
before this Court was granted. Dkt. 176.

On January 30, 2018, Defendants moved for partial summary
judgment on the basis that they had not willfully infringed on
the '485 Patent . Dkt. 200. The same day, Plaintiff moved for
relief under Rule 37, alleging non-compliance with discovery
obligations.

On February 22, 2018, in response to Plaintiff's Rule 37
motion, Defendants cross-moved this Court for sanctions under 28
U.S . C. § 1927, requesting "costs and attorney's fees in
responding to [Plaintiff's] Motion for Relief under Fed. R. Civ.
P. 37." Dkt. 223, at 1 .

On March 14, 2018, Defendants ' motions for partial summary
judgment, Plaintiff's motion for Rule 37 relief, and Defendants '
motion for Section 1927 sanctions were heard and marked fully
submitted.

3

Applicable Standard

Summary Judgment
Summary judgment is appropriate whe r e "there is no genuine
issue as to any materia l fact and .

. the moving party is

entit l ed to a judgment as a mat t er of l aw. "

Fed. R. Civ. P.

56(c) . A genuine issue of materia l fact exists when " the
evidence is such that a reasonable jury could return a v erdict
for the nonmoving party . "
U.S . 242 , 248

Anderson v . Liberty Lobby , Inc ., 477

(1986) . The relevant inquiry is "whether the

evidence presents a sufficient disagreement to require
submission to a jury or whether it i s so one - sided that one
party must prevail as a matter of law ."

Id . at 251 - 52 . A court

is not charged with weighing the evidence and determin i ng its
truth at the summary judgment stage. Rather, it must determine
whether there is a genuine issue for trial . Westinghouse Elec .
Corp. v . N. Y.C. Transit Auth ., 735 F. Supp . 1205, 1212 (S.D . N. Y.
1990)

(quoting Anderson , 477 U.S . at 249) . "[T]he mere existence

o f some alleged factua l dispute between the parties will not
defeat an otherwise proper l y supported motion for summary
judgment ; the requirement is that there be no genuine issue of
material fact." Anderson , 477 U. S. at 247 - 48
original).

4

(emphasis in

Relief under Federal Rule 37

Federal Rule of Civil Procedure 37(b) provides for
penalties against parties that "fail to obey an order to provide
or permit discovery." Fed. R. Civ . P. 37 (b) (2) (A) (v) . When such
a finding is made, district courts have "broad discretion in
fashioning an appropriate sanction" under Rule 37 . Residential
Funding Corp . v. DeGeorge Fin. Corp ., 306 F.3d 99 , 107

(2d Cir.

2002) ; Fed. R . Civ . P . 37 (b) (2) (A).

When discovery orders are disobeyed, courts may strike
pleadings, stay proceedings, hold parties in contempt of court ,
render a default judgment, or draw an adverse factual
designation against the disobeying party. Fed. R. Civ . P.
37 (b) (2) (A) (i) - (vii) .

An adverse factual designation may be appropriate where a
party kn ow ingly fails to produce relevant evidence despite
having control over that evidence , and an obligation to produce
the same. Residential Funding Corp. v . DeGeorge Fin. Corp ., 306
F.3d 99, 107

(2d Cir . 2002) .

A court must " cons ider the extent to which the prevailing
party has been prejudiced by the defaulting party's
5

noncomp l iance and must ensure that any sanct i on imposed is just
and commensurate with the fa i lure to comply . " Doug ' s Word
Clocks . c om Pty Ltd . v . Princess I nt ' l , In c ., No . 16 Civ . 7322
(JMF) , 2017 W 4083581 , a t
L

*5 (S . D. N. Y. Sept . 1 4 , 20 1 7)

(internal citati o ns and quota t ion marks omi tted). However ,
dismissal can be " not mere l y to pena l ize those whose conduct may
be deemed to warrant s u ch a sanct i on , but to deter those who
might be tempted to such conduct in t h e absence of such a
sanction ." Ag i wal v . Mi d I sland Mortg . Corp ., 555 F . 3d 298 , 303
(2d Cir. 2009)

(quoting Na t' l Hockey League v . Metro . Hockey

Club , Inc . , 4 2 7 U . S . 6 3 9 , 6 4 3 ( 1 9 7 6) ) .

Additiona ll y , Rule 37 provides that , " [ i] nstead of or in
add i t i on to the orders above , t h e court mu st order the
disobedient party , the attorney advising that par t y , or both to
pay the reasonable expenses , i ncluding attorney ' s fees , caused
by the fa i lure , unless the fa i lure was substant i a ll y just i fied
or other circumstances make an award of expenses u nj u s t." Fed.
R . Ci v . P . 37 (b)

(2) (C) .

Sanctions under 28 U. S . C . § 1 927

28 U. S . C . Section 1927 author i zes sanct i ons where "an
attorney so mul ti plies proceedings and engages i n vexat i ous
6

conduct in bad faith." In re Auction Houses Antitrust Litig. , 00
Civ . 0648

(LAK)

(RLE) , 2004 U. S. Dist . LEXIS 23351, at *18

(S.D.N . Y. Nov. 17 , 2004) ; 28 U.S . C . § 1927 . A federal District
Court has the authority , when an attorney ' s conduct crosses the
line from "misunderstanding , bad judgment , or well - intentioned
zeal ," to frivolousness and harassment , to excess costs ,
including attorneys' fees , against that attorney . Veneziano v .
Long Island Pipe Fabrication & Supply Corp, 238 F.Supp. 2d 683,
694

(D . N.J. 2002); 28 U. S . C. § 1927 .

Defendants ' Summary Judgment Motion is Granted

In order "to willfully infringe a patent, the patent must
exist and the accused infringer must have knowledge of it."
State I ndus ., Inc . v. A. O. Smith Corp ., 751 F . 2d 1226, 1236; see
also Investment Technology Group , Inc. v. Liquidnet Holdings ,
Inc. , 759 F.Supp.2d 387 , 410 (S . D. N.Y. Dec . 21, 2010). It is
well - settled that knowledge of the non-infringer's patent is a
necessary element to a claim of willful infringement. See id.;
see also Gustafson , Inc . v . Intersystems Indus. Prods ., Inc .,
987 F.2d 508 , 511 (Fed. Cir . 1990)
found to have ' willfully '

("Hence a party cannot be

infringed a patent of which the party

had no knowledge . ") Stickle v. Heublein , Inc. , 716 F.2d 1550 ,
1565 (Fed . Cir . 1983) (affirming willfulness finding where
7

defendant "knew of the '0 23 patent" "but failed to investigate
the scope of the patent or seek the opinion of competent
counsel " ) ; Stryker Corp. c. Intermedi cs Orthopedics,

Inc.,

96

F.3d 1409, 1414 (Fed. Cir. 1996).

Knowledge must be shown "by clear and convincing evidence
that the infringer acted despite an objectively high likelihood
that its actions constituted infringement of a valid patent."
Pecarina v . Vutec Corp ., 934 F.Supp.2d 422, 450

(E.D.N . Y. Nov.

30 , 2012) ; see also Halo Electronics v. Pulse Electronics 136
S.Ct. at 1926.

("A patent infringer's subjective willfulness,

whether intentional or knowing, may warrant enhanced
damages[.]"). "Know ledge" is defined for this purpose as
"knowledge of the allegedly infringed patent and its claims."
Va. Inn ovat i ons Scis., Inc. v. Samsung Elecs. Co ., 983 F. Supp.
2d 700, 706 (E .D. VA . 2013) ; Fuzzysharp Te chs ., Inc. v. Nvidia
Corp. , 2013 U.S. Dist. LEXIS 126989, at *7

(N .D. Cal. Sept. 4 ,

2013); Rembrandt Soc. Media, LP v . Facebook, Inc.,

950 F.Supp.2d

8 7 6 , 8 8 2 ( E. D. VA . 2013) .

Where a judi cia l determination of willful infringement is
made, federal courts have broad discretion to "increase the
damages up to three times the amount found or assessed" under 35
U.S.C. 284. The Supreme Court has held that, while district
8

courts are given such discretion "free from [] inelastic
constraints , " enhanced damages "should generally be reserved for
egregious cases typified by willful misconduct." Halo
Electronics v . Pulse Electronics, 136 S.Ct. 1923 , 1933 - 34. The
Halo Court was careful to note, however , that "none of this is
to say that enhanced damages must follow a finding of egregious
misconduct." Id . at 1933 (emphasis added).

Here, at summary judgment, Defendants must show that there
is no triable issue of material fact on the issue of
willfulness. If Defendants can point to an absence of record
evidence concerning its knowledge of the '485 patent and its
claims-an essential element to a willful infringement claimsummary judgment is proper . See Brady v . Town of Colchester, 863
F . 2d 205, 211 (2d Cir . 1988)

("[I]n cases where the nonmovant

will bear the ultimate burden of proof at trial on an issue, the
moving party's burden under Rule 56 will be satisfied if he can
point to an absence of evidence to support an essentiar element
of the n onmoving party's claim. " )
Catrett, 477 U.S. 317

(citing Celotex Corp. v.

(1986).

Defendants , having shown by clear and convincing evidence
an absence of evidentiary support for the essential element of

9

knowledge, make that showing. Summary judgment on the issue of
no willful infringement is therefore proper .

Plaintiff urges the Court to examine the "extensive
evidence of knowledge" in this case . Pl. Opp . at 14 . First,
Plaintiff points to the 2006 purchase of the Hoffend winch
company-along with its Vortek product-as evidence of
Daktronics's "pre-suit knowledge of the ' 485 patent and its
relationship to the Vortek Product." Pl. Opp. at 14-15 .
According to Plaintiff, Defendants ignored an "obvious risk of
infringement" in making the purchase and hiring former Hoffend
employees. Id. at 15 . Regarding the 2006 purchase , Plaintiff
makes two arguments: first, that Daktronics acquired whatever
kn ow ledge Hoffend had simply by purchasing them; and second ,
that through due diligence Daktronics acquired substantive
information about Hoffend's intellectual property, including the
'4 8 5 patent. 1

1

According to Plaintiff, "[b]ecause nearly all of the Hoffend
employees became Daktronics employees after the acquisition ,
their knowledge became Daktronics' knowledge-including the
knowledge of the ' 485 patent and its relationship to the
Vortek. " Plaintiff submits that , "a reasonable jury could
conclude that Daktron~cs developed further substantive knowledge
through any due diligence review of the acquisition .
"Pl.
Opp. at 17 .
10

First, Plaintiff cites no case law in support of the
proposition that , in purchasing a company, an acquirer adopts
the knowledge of its target for purposes of willful patent
infringement. The Court finds no such case law.

Second, as to due diligence, Daktronics contends that "the
on l y evidence is that Daktronics did not conduct any due
diligence of those patents when it bought the Hoffend business."
Dkt. 236 at 10 ("Nor did it receive a copy of the [patent] file
histories."). There is simply no evidence in the record to
suggest Daktronics conducted substantive due diligence into
Hoffend's patents and their claims to determine potential
infringements. And it is well-settled in this Circuit that
"specu lati on cannot defea t

summary judgment." Orange Re'l Med.

Ctr ., 690 Fed. Appx. 736 , 740 (2d Cir. 2017)

(concerning

knowledge of corporate officers) ; Great Am. Ins. Co., 607 F.3d
288 , 292

(2d Cir . 2010); Matsushita Elec. Indus. Co . v. Zenith

Radio Corp ., 475 U.S. 574 , 586 106 S.Ct. 1348 (1986)

(to defeat

summary judgment, the non -moving party "may nor rely on
conclusory allegations or unsubstantiated speculation.")
(emphasis added). There is no record of due diligence concerning
the '485 patent. Nor is there an indication that Daktronics
itself received-let alone reviewed-the patent file histories
containing the '4 85 patent.
11

Besides , Daktronics negotiated and received a
representation and warranty that Hoffend " did not infringe any
intellectual property rights . " Dkt. 236 at 11 . Whether a
Daktronics should have inquired into existing patents before the
acquisition is a question for another day . This Court must
determine whether the record contains a triable issue of
material fact concerning Daktronics '

knowledge of the ' 485

patent such that a reasonable jury could find willful
infringement.

Plaintiff then suggests that its outside patent pr os ecution
counsel , Schwegman, Lundberg , Woessner & Kluth , P.A.
( " Schwegman"), had know l edge of the ' 485 patent , and thus
Daktronics must have "developed intimate knowledge" of the same .
Plaint i ff alleges that Daktronics "had to review the ' 485 Patent
against its Vortek patents and formulate a strategy for
responding to the rejections " from the Patent office .

(D . I . 215 ,

p . 18). But this contention is belied by the record evidence,
including direct testimony from Daktronics , and the
communications themselves .

First, the only correspondence between the Schwegman Firm
and Daktronics regarding the '485 Patent lends no support to
12

Plaintiff's view that there is "extensive evidence of knowledge"
in the record .

As outside patent prosecution counsel, Schwegman wrote
Oaktronics in 2011 to advise it that a response to a USPTO
patent rejection would be drafted , "without requ i ring any work
on OAK ' s end." 0kt. 204, Ex . Bat 2. 2

Responding to a similar patent rejection in 2014 , Schwegman
advised Oaktronics that it would "make a relatively easy
response" to the USPTO and that "the references cannot legally
be used against us . " 3 0kt . 204 , Ex. C . Attached to this email was
a copy of the ' 485 patent, with a note written in red text by
Schwegman that reads "Not prior art. " 0kt. 204 , Ex. 0 . There is
no evidence that Oaktronics reviewed the email attachment,

let

2

The 2011 email , from Greg Smock at Schwegman to Brett Wendler
at Oaktronics, reads , in substantial part: "I reviewed the first
Office Action on this hoist - related patent matter. On first
glance , it appears that the only piece of art being used by the
[USPTO] to reject OAK ' s patent claims is not prior art .
. In
short , SLW can appropriately respond to the US Patent Office ,
without requiring any work on OAK's end . " 0kt . 204 , Ex . Bat 2 .
3

The 2014 email , from Michael Mischnick to Brett Wendler, reads ,
in substantial part , "I have dug in a little deeper in to the
Office Action for [ its patent application] . " Mr . Mischnick then
writes , "I believe we can make a relatively easy response based
on the fact that the references that are being cited by the
Office Action technically are not prior art .
. [which] means
the references [to the '485 Patent] cannot legally be used
against us ." 0kt . 204 , Ex . Cat 2.
13

alone '485's individual claims. Nor could it have, as Daktronics
did not have any patent prosecution attorneys on staff. Dkt.
204, Ex. A at 3.

Right or wrong, Daktronics appears to have taken counsel's
advice by not doing substantive research into the '485 patent.
See Wendler Deel. at 4 ("Following counsel's advice I did not
review the '4 85 Patent"); Id.

("Again, following counsel's

advice I did not review the '4 85 Patent"). On these facts,

a

finding of willful patent infringement, which is "generally []
reserved for egreg i ous cases typified by willful misconduct," is
inappropriate . Halo, 136 S.Ct. at 1934.

At most, the emails are fairly read as providing Daktronics
with n otice of the '4 85 patent's existence. However, Schwegman
clearly advised Daktronics against further action with regard to
the '485 patent. Perhaps Daktronics should have l ooked into the
matter further, against the advice of counsel, and sought a
second opinion. Nevertheless, there being no evidence that
furt her action was taken, willfulness cannot be established. See
Radware, Ltd. V. F5 Netowrks, Inc., No. 5:13-cv-0204-RMW, 2016
U.S. Dist. LEXIS 112504, at *13 (N .D.Cal. Aug. 22, 2016)
(dismissing the "incorrect [] suggesti[on] that willfulness can
be proven by negligence; the Supreme Court has ruled that
14

'i ntentional or knowing' infringement may warrant enhanced
damages. " )

(quoting Halo, 136 S. Ct . at 1933); see also

Greenbatch Ltd., 2016 U. S . Dist . LEXIS 171939, at *6 n.3
("Where , as here, a party fails to adduce sufficient evidence to
support a reasonable jury find ing a s ubje ctive intent to
i nfringe , t ha t party 's wi llful inf rin gement claim may not
survive a motion f or summary judgment ." ) .

Nor is Schwegman 's work preparing inf ormat i on disclosure
statements ("I DS " ) suggestive of willfulness by Daktronics.
First, there is no evidence t hat Daktron i cs participated i n any
way in the creation or r eview of the IDSs that listed the ' 485
patent. Moreover , it is Daktronics's practice "not to review the
I DS 's." Dkt . 204 , Ex . A at 5 . Even if Daktronics had reviewed
one or all of the IDSs that listed the '4 85 patent as prior art ,
r eference to the '4 85 patent is buried among 1 39 patents li sted
on o ne such IDS. Dkt. 204 , Ex. Eat 6 . And courts have he l d that
such citations to patents - in -s uit are insuffi c i ent t o prove
knowledge for purposes of wil lful infringement . See DermaFocus
LLC v . Ulthera , Inc ., 201 F . Supp . 3d 465, 471 (D . Del. 2016)
(find in g "no plausible inference arises from the a llege d facts
that defendant had knowledge " where patent-in-suit was listed as
one o f seven prior art references in an IDS); see also Callwave
Commun i cations LLC v. AT&T Mobi lit y LLC, 2014 WL 53637 41, at *2
15

(finding "citation to the [patent-in-suit] in multiple
Information Disclosure Statements," without more, "insufficient
to support an allegation of willfulness")

Plaintiff devotes a significant portion of its brief to the
argument that whatever knowledge Schwegman had of the '485
patent should be imputed to Daktronics based on an agencyprincipal theory. Plaintiff has not brought to the Court's
attention a single case holding that knowledge from outside
legal counsel is imputable to a client corporation for purposes
of willful patent infringement. The Court finds no such cases.

Nor does Daktronics's sale of ten Vortek units after the
Complaint was fil ed in this case establish willfulness. Def.
Opp. at 15. As the parties well know, this Court held that there
was no literal infringement of the '485 patent. Dkt. 72. The
outstanding issu e to be resolved with regard to infringementequivalent infringement-is a question of fact for the jury.
Accordingly, Daktronics's sale of ten products post-suit, while
under a reasonable belief of non-infringement-as evidenced by
its motion for summary judgment on non-infringement-does not
import the type of egregiousness required to establish willful
infringement.

16

A finding of no willfulness is cons i stent with the evidence
in its entirety. There is no record evidence that Schwegman, let
alone Daktronics, knew of the ' 485 patent ' s individual claims or
that either party believed there was infringement of any kind
before this suit was filed. See discussion supra . Even if
Schwegman had acqu i red substantive knowledge of the ' 485 patent
through the course of its work for Daktronics , the record does
not support a finding that such information was shared with
Daktronics.

Because there is no evidence that Daktronics acquired
substantive knowledge of the ' 485 patent- whether on its own or
through counsel-and because such knowledge cannot be imputed ,
there are no material facts from which a reasonable jury could
conclude Daktronics had "knowledge of the allegedly infringed
patent and its claims ." Innovations Scis. , Inc . v . Samsung
Elecs . Co ., 983 F. Supp . 2d 700 , 706 (E.D . VA. 20 1 3) . Summary
judgment is granted.

17

Plaintiff's Rule 37 Motion is Denied

Where a party "fa i l[s] to obey an order to provide or
permit discovery ,

11

a district court has "broad discretion in

fashioning an appropriate sanction

11

under Rule 37. Residential

Funding Corp. v . DeGeorge Fin . Corp ., 306 F . 3d 99, 1 07

(2d Cir.

2002) ; Fed . R. Civ . P. 37 (b) (2) (A) (v); Fed . R. Civ. P .
37 (b) (2) (A). Among the appropriate sanctions, courts may enter
adverse inference instructions , which is a "severe sanction ,

11

appropriate only where the offending party ' s conduct is " willful
or culpable .

11

R.F . M.A.S ., Inc . v . So , 271 F . R . D. 13 , 52

(S . D.N.Y. 2010), Luft v . Crown Publishers , Inc ., 906 F . 2d 862 ,
866 (2d Cir . 1990) .

Plaintiff requests that this Court impose sanct i ons under
Rule 37 by entering an adverse inference instruction regarding
Daktronics's pre-suit knowledge of the ' 485 patent. This request
stems from a this Court's 2017 order that Daktronics produce
" all materials within its custody or control that are responsive
to each of Plaintiff's Requests for Production

11

and to designate

a 30(b) (6) witness to testify. 0kt. 128 .

Plaintiff argues that Daktronics, in its production of
relevant documents , and its preparation of its 30(b) (6) witness ,
18

Mr. Wendler, willfully failed to comply with a Court order. Dkt.
199.

To the extent Daktronics's productions have been
unsatisfactory to Plaintiff, there is no indication of
willfulness. For example, Daktronics named Mr. Wendler as its
30(b) (6) witness, listing certain issues about which he would,
and ultimately did, testify. Defendants did not object then, and
their belated attempt to do so now falls short of establishing
willfulness. Plaintiff's displeasure with the outcome of that
deposition cannot form the basis of an adverse factual inference
at this stage.

Nor can Daktronics's failure to seek documents from
Schwegman support an adverse inference. Shcherbakovskiy v. De
Capo Al Fine. Ltd., 490 F.2d 130, 138 (2d Cir. 2007)

("[A] party

also need not seek such documents from third parties if
compulsory process against third parties is available").

There being no evidence that Defendants have willfully
violated Court-ordered discovery in this case, the motion for
sanctions is denied.

19

Defendant's Section 1927 Motion for Sanctions is Denied

Under 28 U.S . C. 1927 , sanctions are proper where "an
attorney so multiplies proceedings and engages in vexatious
conduct in bad faith." In re Auction Houses Antitrust Litig.,
Civ . 0648

(LAK)

(RLE ) , 2004 U.S . Dist. LEXIS 23351 , at *18

(S .D.N.Y. Nov. 17 , 2004) ; 28 U.S.C. § 1927.

Defendant seeks attorneys '

fees and costs based on

Plaintiff ' s motion for Rule 37 sanctions , which it calls
" shockingly meritless ."

Bad faith being a prerequisite to an award of attorney ' s
fees and costs , and none being found , the motion is denied.
There is no indication that Defendant's conduct in seeking
sanctions goes beyond "well-intentioned zeal ," to bad faith.
Venezia no v . Long Island Pipe Fabrication & Supply Corp , 238
F.Supp . 2d 683 ,

694

(D .N.J. 2002).

20

00

Conclusion

Defendants' motion for summary judgment is granted .
Plaintiff ' s motion for Rule 37 sanctions is denied. Defendants '
cross-motion for sanctions under Section 1927 is denied .

It is so ordered .

New York , NY
July /

l'

2018

U . S.D.J.

21