De Jaray et al v. Lattice Semiconductor Corporation et al

Filing 622

ORDER - The Court DENIES Lattice's motion for attorney's fees and costs, ECF 564 . Signed on 3/7/2025 by Judge Michael H. Simon. (mja)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

STEVEN A.W. DE JARAY, PERIENNE
DE JARAY, DARRELL R. OSWALD, and
APEX-MICRO MANUFACTURING
CORPORATION,

Case No. 3:19-cv-86-SI
ORDER

Plaintiffs,
v.
LATTICE SEMICONDUCTOR
CORPORATION, and JOHN AND JANE
DOES 1-20,
Defendants.
Michael H. Simon, District Judge.
Mr. Steven de Jaray, Ms. Perienne de Jaray, and Mr. Darrell R. Oswald (collectively, the
“Individual Plaintiffs”) sued Lattice Semiconductor Corporation (“Lattice”), alleging state and
federal law claims arising from a business relationship between Lattice and Apex-Micro
Manufacturing Corporation (“Apex”), a corporation in which the Individual Plaintiffs were
executives and shareholders. The Court later granted leave to file a Second Amended Complaint
(“SAC”) to add Apex as an additional plaintiff. The Court refers to Apex and the Individual
Plaintiffs collectively as “Plaintiffs.” All Plaintiffs were represented jointly.

PAGE 1 – ORDER

Throughout this lawsuit, Plaintiffs alleged that Lattice failed to disclose correctly the
export-controlled status of two programmable logic devices (“PLDs”) manufactured by Lattice
and sold to Apex. Plaintiffs alleged that Lattice’s datasheets stated or implied that these PLDs
were not export controlled and that Lattice never told Plaintiffs otherwise. Although different
Plaintiffs were actively litigating at various points throughout the litigation, including at trial,
they consistently contended that they relied on these datasheets in believing the PLDs were not
export controlled. Apex shipped the PLDs from Canada to Hong Kong. The products were seized
by the Canada Border Services Agency (“CBSA”), who contended that the products ultimately
were destined for Mainland China and thus needed an export-control permit. At trial, Lattice
argued that Plaintiffs did not rely on the datasheets, were shipping the products to Mainland
China through Hong Kong, and likely knew that the PLDs were export controlled.
Plaintiffs’ claims were subject to significant pretrial proceedings. The parties are familiar
with the background of this litigation, and a thorough discussion can be found in the Court’s
Order denying Lattice’s Motion for Leave to Move for Sanctions Against Law Firms, ECF 608.
By the time trial began, the only remaining Plaintiffs were Apex and Mr. de Jaray. At the
conclusion of trial, the Court submitted to the jury only Apex’s claims alleging fraud and breach
of the implied duty of good faith and fair dealing.1 The jury found that Lattice was not liable to
Apex on either claim.
Lattice now seeks attorney’s fees of $11,167,224.39 and costs of $2,052,434.622 from
Plaintiffs, pursuant to: (1) the Court’s inherent authority; (2) Oregon Revised Statutes (“ORS”)
1

At trial, the Court granted judgment as a matter of law against all claims brought by
Mr. de Jaray. The Court also granted judgment as a matter of law against Apex’s negligencebased claims.
Lattice’s original motion sought attorney’s fees of $11,176,404.39 and costs of
$2,200,820.95. ECF 564 at 9. In its reply, Lattice withdrew from its fee request $8,600 for time
2

PAGE 2 – ORDER

§ 20.105; (3) the Lanham Act, 15 U.S.C. § 1117(a); and (4) Rule 37 of the Federal Rules of Civil
Procedure. For the reasons stated below, the Court denies Lattice’s motion.
STANDARDS
Under the American Rule, attorney’s fees are generally recoverable only if there is a
contract clause or statutory basis. See Am. Republic Ins. v. Union Fid. Life Ins., 470 F.2d 820,
826 (9th Cir. 1972). A court also may award attorney’s fees as a sanction pursuant to the court’s
inherent authority. “Federal courts possess certain ‘inherent powers,’ not conferred by rule or
statute, ‘to manage their own affairs so as to achieve the orderly and expeditious disposition of
cases.’” Goodyear Tire & Rubber Co. v. Haeger, 581 U.S. 101, 107 (2017) (quoting Link v.
Wabash R.R., 370 U.S. 626, 630-31 (1962)). “That authority includes ‘the ability to fashion an
appropriate sanction for conduct which abuses the judicial process.’” Id. (quoting Chambers v.
NASCO, Inc., 501 U.S. 32, 44-45 (1991)). A district court may, for example, dismiss a case in its
entirety, bar witnesses, exclude other evidence, award attorney’s fees, or assess fines. F.J.
Hanshaw Enters., Inc. v. Emerald River Dev., Inc., 244 F.3d 1128, 1136 (9th Cir. 2001).
“Although it is preferable that courts use—and first consider—the range of federal rules and
statutes dealing with misconduct and abuse of the judicial system, ‘courts may rely upon their
inherent powers to sanction bad-faith conduct even where statutes and rules are in place.’” Am.
Unites for Kids v. Rousseau, 985 F.3d 1075, 1088 (9th Cir. 2021) (quoting F.J. Hanshaw, 244
F.3d at 1136-37). “Because of their very potency, inherent powers must be exercised with
restraint and discretion.” Chambers, 501 U.S. at 44.

spent researching wrongful and malicious prosecution claims and $290 for preparation of a “road
show.” ECF 614 at 2. Lattice also withdrew from its requested costs $10,295 in document
preparation fees, $947.01 for travel, $5,256.17 for first-class flights, and $131,888.15 already
awarded by the Court as prevailing party costs. Id. at 2-3.

PAGE 3 – ORDER

“[A] district court acting under its inherent authority to impose compensatory sanctions
must apply a ‘but-for’ causation standard.” Am. Unites for Kids, 985 F.3d at 1089 (citing
Goodyear, 581 U.S. at 109). In other words, a compensatory sanction might be available if a
court concludes that but for the sanctionable misconduct, there would not have been any harm
warranting the relief. Id. at 1089-90. To impose a compensatory sanction, a court must find
either: (1) a willful violation of a court order; or (2) bad faith on the part of the contemnor. Id.
at 1089. Willfulness and bad faith are distinct concepts. A “willful” violation of a court order
does not require proof of mental intent, such as an improper motive; rather, it is enough that the
party acted deliberately. Evon v. Law Offs. of Sidney Mickell, 688 F.3d 1015, 1035 (9th
Cir. 2012). Bad faith, on the other hand, requires proof of bad intent or improper purpose. Id.
DISCUSSION
As noted, Lattice argues that it is entitled to attorney’s fees pursuant to: (1) the Court’s
inherent authority; (2) ORS § 20.1053; (3) the Lanham Act; and (4) Rule 37 of the Civil Rules of
Procedure. Although there are slight differences in the standards, at the core of the first three
bases is the argument that Plaintiffs knew that their claims lacked a factual basis.4 Rule 37, on

“[I]n a pure federal question case in federal court, federal law governs attorneys’ fees.”
Indep. Living Ctr. of S. Cal., Inc. v. Kent, 909 F.3d 272, 281 (9th Cir. 2018) (quotation marks
omitted). In cases involving both state and federal claims, “so long as state law does not run
counter to a valid federal statute or rule of court . . . state law denying the right to attorney’s fees
or giving a right thereto, which reflects a substantial policy of the state, should be followed.” Id.
at 281-82 (quotation marks omitted). Thus, Oregon law governs an award of attorney’s fees for
Plaintiffs’ state law claims. See id. at 283 (looking to California law to determine whether
attorney’s fees were available because it was a state law cause of action).
3

Under the Court’s inherent authority, sanctions may be imposed when “a party has
acted in bad faith, vexatiously, wantonly, or for oppressive reasons, delaying or disrupting
litigation, or has taken actions in the litigation for an improper purpose.” Fink v. Gomez, 239 F.3d
989, 992 (9th Cir. 2001). Courts have found that a party may be sanctioned for bringing claims if
the claims “completely lack a factual foundation.” See Humphries v. Button, 2024 WL 624240,
at *2 (D. Nev. Feb. 13, 2024) (quoting Power Analytics Corp. v. Operation Tech, Inc., 2017
WL 2903257, at *3 (C.D. Cal. June 7, 2017)); see also Martz v. Muncaster, 2019 WL 13204202,
4

PAGE 4 – ORDER

the other hand, depends on an alleged discovery violation. The Court addresses Lattice’s first
three arguments together, then turns to its Rule 37 argument.
A. Lack of Factual Support
Lattice argues that the Court should award attorney’s fees as sanctions against Plaintiffs
because they filed this lawsuit “knowing that the key allegations in their complaint were not
true,” lied throughout the case, and knew that their claims lacked a factual foundation.5

at *2-3 (N.D. Cal. Aug. 14, 2019). But “[e]ven weak claims are sufficient to avoid sanctions.”
Humphries, 2024 WL 624240, at *2.
ORS § 20.105 provides that “the court shall award reasonable attorney fees to a party
against whom a claim, defense or ground for appeal or review is asserted, if that party is a
prevailing party in the proceeding” and “there was no objectively reasonable basis for asserting
the claim, defense or ground for appeal.” ORS § 20.105(1). “[T]he prevailing party is the party
who receives a favorable judgment or arbitration award on the claim.” ORS § 20.077(2). A claim
“lacks an objectively reasonable basis only if it is entirely devoid of legal or factual support,
either at the time it is made or, in light of additional evidence or changes in the law, as litigation
proceeds.” Minihan v. Stiglich, 258 Or. App. 839, 861 (2013) (emphasis added) (cleaned up).
Accordingly, if evidence lends “at least some support to each element of the claim,” the claim
does not lack an objectively reasonable basis. Lenn v. Bottem, 221 Or. App. 241, 249 (2008).
Under the Lanham Act, “[t]he court in exceptional cases may award reasonable attorney
fees to the prevailing party.” 15 U.S.C. § 1117(a). “A party is a prevailing party for purposes of
an attorneys’ fee award if it achieved a material alteration in the legal relationship of the parties
that is judicially sanctioned.” Fifty-Six Hope Rd. Music, Ltd. v. A.V.E.L.A., Inc., 778 F.3d 1059,
1078 (9th Cir. 2015). A court should look to the “totality of the circumstances” to determine if
the case is exceptional. SunEarth, Inc. v. Sun Earth Solar Power Co., 839 F.3d 1179, 1180 (9th
Cir. 2016) (quoting Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554
(2014)). “An ‘exceptional’ case is simply one that stands out from others with respect to the
substantive strength of a party’s litigating position (considering both the governing law and the
facts of the case) or the unreasonable manner in which the case was litigated.” Octane
Fitness, 572 U.S. at 554. There “is no precise rule or formula for making these determinations,”
but the Supreme Court identified a “nonexclusive” list of factors to consider, including
“frivolousness, motivation, objective unreasonableness (both in the factual and legal components
of the case) and the need in particular circumstances to advance considerations of compensation
and deterrence.” Id. at 554, 554 n.6 (quotation marks omitted).
5

The parties do not dispute that Lattice is the prevailing party on all claims. On
October 7, 2022, the Court emailed the parties a tentative opinion in which the Court indicated
that it may grant Lattice’s motion for summary judgment against the Individual Plaintiffs’ claims
for breach of duty of good faith and fair dealing and under the Lanham Act. The Court then
PAGE 5 – ORDER

Specifically, Lattice contends that Plaintiffs did not rely on Lattice’s datasheets, and the only
evidence to support Plaintiffs’ claims was false testimony. Lattice cites inconsistencies in
Mr. de Jaray’s testimony and argues that “[a] plaintiff’s testimony alone . . . is insufficient to
support a claim as objectively reasonable where other evidence directly contradicts that
testimony and thus demonstrates that plaintiffs’ position was untenable.” Kraft v. Arden, 2009
WL 73869, at *4 (D. Or. Jan. 8, 2009); see also Lenn, 221 Or. App. at 249 (holding that the
plaintiffs’ testimony about their belief which was “directly counter to other evidence of their
belief, does not render their claim objectively reasonable”).
Plaintiffs respond that their claims were “amply supported by evidence.” Plaintiffs also
cite two cases from this district to argue that their claims were supported because they survived
summary judgment and a motion for directed verdict. See Ibanez de Dios v. Siri & Sons Farms,
Inc., 2022 WL 16782452, at *1 (D. Or. Nov. 8, 2022) (assessing claims under an Oregon feeshifting statute and concluding that “[b]ecause Plaintiff’s claims survived a directed verdict and
went before a jury, . . . Plaintiff’s claims were not frivolous, unfounded, or objectively
unreasonable”); Kibbee v. City of Portland, 2000 WL 1643535, at *8 (D. Or. Oct. 12, 2000)
(explaining that “Defendants do not claim that [the plaintiff’s] claims lack merit, nor could they
since [the plaintiff’s] claims survived summary judgment,” even where the court previously held

denied Plaintiffs’ motion for leave to amend the complaint to bring a Lanham Act claim by
Apex, who the Court allowed as an additional Plaintiff. ECF 255. Plaintiffs later filed their SAC
asserting the breach of duty of good faith and fair dealing only on behalf of Apex. ECF 256
¶ 113. The Court granted summary judgment against Ms. de Jaray and Mr. Oswald’s remaining
state law claims for negligence and negligent misrepresentation, ECF 277, and fraud, ECF 452.
The Court dismissed Mr. de Jaray’s remaining state law claims and Apex’s negligence and
negligent misrepresentation claims during trial. ECF 556 at 261-64, 265-66, 277-78 (Trial
Tr. 2740:18-2743:20, 2744:14-2745:7, 2756:23-2757:1, 2757:21-24). The jury returned a verdict
finding no liability on the remaining claims—Apex’s fraud and breach of duty of good faith and
fair dealing claims. ECF 510.

PAGE 6 – ORDER

that the plaintiff had submitted sham affidavits and videotapes). With respect to Apex’s Lanham
Act claim, Plaintiffs contend that it is not an exceptional case because where a “plaintiff has
raised ‘debatable issues’ and can be found to have had a legitimate reason for bringing the
lawsuit, it supports a finding that a case is not exceptional.” Delta Forensic Eng’g, Inc. v. Delta
V Biomechs., Inc., 2021 WL 243323, at *5 (C.D. Cal. Jan. 22, 2021).
That Plaintiffs’ claims survived motions to dismiss and for summary judgment is not
itself sufficient to establish an objectively reasonable basis. A claim could survive summary
judgment based on a lie. The Court does not find, however, that Plaintiffs’ claims were “entirely
devoid of legal and factual support.” See Minihan, 258 Or. App. at 861. At summary judgment,
Plaintiffs submitted evidence of a message from Lattice’s Chief Executive Officer contained in
Lattice’s Export Control Manual (“ECM”) stating:
I am personally committed to integrating export control
compliance into our general corporate culture.
***
Penalties for violations of U.S. and Singapore export control law
may include substantial fines and imprisonment. In addition,
violations could cause [Lattice] to lose its export privileges. Since
a large percentage of our sales revenue derives from international
transactions, any suspension or loss of export privileges would be
devastating. Violation of other applicable export control laws
could have similar consequences.
ECF 159-4 at 4. The ECM also contained a policy for “Compliance with Export Controls,”
which reinforces that “[s]ignificant civil and criminal penalties may apply to companies and
individuals committing violations of Export Controls. The Legal Department must be consulted
in any case where the proper actions for compliance with Export Controls are not clearly
understood and approved.” Id. at 8.

PAGE 7 – ORDER

At summary judgment, Plaintiffs also cited the testimony of Lattice’s export-control
expert at deposition that the datasheets would “definitely be one piece of information that you
would want to look at in order to help identify what—how the item might be classified. That
would be one piece of information [that] would be useful.” ECF 298-3 at 3 (Depo Tr. 160:1014); see also ECF 196-2 at 5 (Gariepy Depo Tr. 41:9-15) (deposition testimony of Lattice’s
former Vice President of Corporate and Customer Quality, Michael Gariepy, that Lattice’s
“customers would expect the product we shipped to meet the specifications listed in the data
sheets”).
At trial, Plaintiffs offered their own expert, Thomas Andrukonis. Mr. Andrukonis worked
for nearly 41 years at the Bureau of Industry and Security. He testified that to determine if a
semiconductor requires a permit to ship, one should look at the datasheet and then look at the
commerce control list to see if the item is export controlled. See, e.g., ECF 542 at 134, 136-37,
143 (Trial Tr. 405:11-18, 407:21-408:5, 414:5-14). Further, although the Court recognizes that
Mr. de Jaray had credibility issues at trial, Plaintiffs also offered testimony at trial that Lattice
changed the export-controlled status of the PLDs at issue but did not amend its datasheets or
notify its customers of that change. See ECF 541 at 207-09 (Trial Tr. 207:22-209:9). This
evidence lends at least some factual support to Plaintiffs’ claims.
Lattice’s “vehement, heartfelt, intense disagreement with Plaintiffs’ position is not a basis
for sanction[s].” Humphries v. Button, 2024 WL 624240, at *2 (D. Nev. Feb. 13, 2024)
(quotation marks omitted). As noted, Plaintiffs’ claims are only sanctionable if they completely
lack a factual foundation. Id.; see also Martz v. Muncaster, 2019 WL 13204202, at *2-3 (N.D.
Cal. Aug. 14, 2019). Plaintiffs did not completely lack a factual foundation for their claims, even
if Mr. de Jaray lacked credibility or was not fully forthcoming in his declarations or discovery

PAGE 8 – ORDER

responses. The Court thus denies to award attorney’s fees under its inherent authority,
ORS § 20.105, or the Lanham Act.
B. Rule 37
Under Rule 37(b)(2)(C) of the Federal Rules of Civil Procedure, when a party fails to
obey a discovery order, “the court must order the disobedient party, the attorney advising that
party, or both to pay the reasonable expenses, including attorney’s fees, caused by the failure,
unless the failure was substantially justified or other circumstances make an award of expenses
unjust.” Lattice argues that Mr. de Jaray failed to obey a discovery order by submitting a false
response to its interrogatory number 13, in which he stated that the seized goods that were
detained by the CBSA “were not destined for [business entities] Mingwell and/or Nancan or their
respective affiliates.” At trial, Mr. de Jaray testified that he “can’t deny” that “all the Lattice
chips that [Plaintiffs] purchased between December 30th, 2005, and December 22nd, 2009, that
all of them in fact were trans-shipped and sold to Mingwell.” ECF 552 at 99 (Trial
Tr. 1390:11-17).
Plaintiffs respond that Mr. de Jaray was not purposely deceptive in his interrogatory
responses but simply was unclear in describing the consignment model he testified about at trial.
According to Plaintiffs, the products were not “destined for” Mingwell because they were only
“consigned” to Mingwell for incorporation into products that would be sent back to Canada.
It is not unheard of for a party to lie in sworn response to an interrogatory. The Court
does not condone this, but to allow such a response to shift the burden of attorney’s fees
undermines the American rule. Despite Lattice’s contention that “a truthful answer [by
Mr. de Jaray] would have ended the case” because Lattice would have won summary judgment
on terminating sanctions, this is far from certain. Lattice’s confirmation that Plaintiffs shipped
chips to Mingwell in Hong Kong would not necessarily defeat Plaintiffs’ claims based on
PAGE 9 – ORDER

misrepresentations in Lattice’s datasheets. Lattice also argues that all its “discovery efforts were
focused on proving that the de Jarays were engaged in a diversion scheme via secret sales to
Mingwell” and that “was the entire focus at trial.” Again, this overstates the importance of the
interrogatory response. Even if Mr. de Jaray had admitted that Apex was shipping chips to
Mingwell, this does not mean that he would have admitted that Plaintiffs were involved a
diversion scheme. Thus, Mr. de Jaray’s false or misleading response to the interrogatory does not
warrant sanctions under Rule 37(b).
CONCLUSION
The Court DENIES Lattice’s motion for attorney’s fees and costs, ECF 564.
IT IS SO ORDERED.
DATED this 7th day of March, 2025.
/s/ Michael H. Simon
Michael H. Simon
United States District Judge

PAGE 10 – ORDER