Whotoo, Inc v. Dun & Bradstreet, Inc

Filing 119

ORDER striking parties' 60 66 Motions for Summary Judgment; denying defendant's 103 Motion for Relief from Spoliation; ordering parties to comply with requirements outlined in order by Judge Richard A Jones.(RS)

HONORABLE RICHARD A. JONES

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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WHOTOO, INC.,
Plaintiff,

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v.

Defendant.

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I.

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INTRODUCTION

This matter comes before the Court on Defendant Dun & Bradstreet, Inc.’s
(“D&B”) Motion for Relief for Spoliation. Dkt. # 103. Having considered the briefing
of the parties, relevant portions of the record, and the oral arguments of counsel, the
Court DENIES D&B’s motion. As specified in further detail below, however, the Court
finds that less severe sanctions may be warranted. Accordingly, the Court STRIKES the
parties’ pending motions for summary judgment, Dkt. ## 60, 66, and ORDERS the
parties to take additional steps toward resolving this dispute.

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ORDER

DUN & BRADSTREET, INC.,

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Case No. C15-1629-RAJ

II. BACKGROUND
Plaintiff WhoToo, Inc. (“WhoToo”) filed this action against D&B for breach of
contract, tortious interference with business expectancy, and injunctive relief. Dkt. # 1.
The parties have since engaged in discovery and filed motions for summary judgment.
On December 13, 2016, after submitting its motion for summary judgment, D&B

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learned that WhoToo is named as a defendant in a state proceeding pending in King

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ORDER – 1

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County Superior Court, Shannon v. WhoToo, Inc., et al., No. 15-2-24758-1. Dkt. # 104 at
1. WhoToo is represented by the same lead counsel in that case as it is in this case.
Compare Dkt. # 104-1 at 22 with Dkt. # 60 at 26.
On December 19, D&B retrieved documents filed in the Shannon v. WhoToo
matter from King County Superior Court’s filing docket. Id. at 2. Some of these
documents are highly relevant to D&B’s defense in the instant matter, yet were not
produced by WhoToo during discovery. For instance, one of the central facts at issue in
this case is whether WhoToo developed a functional application programming interface
(“API”) for a third party, 6Sense Insights, Inc. (“6Sense”), with which D&B had a
business arrangement. Dkt. # 12 at 10-11. Throughout the course of this litigation,
WhoToo has maintained that it delivered a functional API to 6Sense. See, e.g., Dkt. # 95
at 4 (“The record confirms that WhoToo delivered a working API.”). This issue also
arose in the Rule 30(b)(6) deposition of WhoToo’s CEO, Matt Rowlen. When asked
what problems he was aware of during the development of the API, Rowlen testified that
he “wasn’t involved with the—with the details of that, other than I have seen some
discovery as it related to it since” and that any such problems were limited to “timing and
time.” Dkt. # 67-2 at 48.
The documents obtained by D&B from the state proceeding undermine these
representations concerning the functionality of the API. For example, in a sworn
declaration, Rowlen represented that the API was “radically different” than anticipated
internally and “also radically different from what I had communicated to D&B.” Dkt. #
104-2 at 6. In an underlying email, Rowlen expressed that the API developed by
WhoToo may have “killed the deal” with 6Sense. Dkt. # 104-3 at 16. Further
communications confirm Rowlen’s discontent with the API. See, e.g., id. at 12 (“I’m
furious.”).
D&B filed a motion for relief from spoliation on the basis that WhoToo
intentionally withheld documents and acted in bad faith. As a remedy, D&B requests that
ORDER – 2

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WhoToo’s action be dismissed with prejudice or, in the alternative, that the Court instruct
the jury to draw an adverse inference from WhoToo’s failure to produce evidence. On
January 4, 2017, the Court held a telephonic hearing on D&B’s motion. Dkt. # 103.
Since then, WhoToo has filed an opposition to D&B’s motion and produced further
responsive documents. Dkt. # 111.
III. LEGAL STANDARD

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The Court has broad discretion to control discovery. Avila v. Willits Envtl.
Remediation Trust, 633 F.3d 828, 833 (9th Cir. 2011). “There are two sources of
authority under which a district court can sanction a party who has despoiled evidence:
the inherent power of federal courts to levy sanctions in response to abusive litigation
practices, and the availability of sanctions under Rule 37 against a party who ‘fails to
obey an order to provide or permit discovery.’” Leon v. IDX Sys. Corp., 464 F.3d 951,
958 (9th Cir. 2006) (quoting Fjelstad v. Am. Honda Motor Co., 762 F.2d 1334, 1337-38
(9th Cir. 1985). Certain sanctions, such as dismissal, require a showing bad faith. Id.
Other sanctions, such as an adverse jury instruction, do not require a showing of bad
faith. Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th Cir. 1993).
IV. DISCUSSION

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Based on the record at this juncture, there is insufficient evidence to justify
dismissing WhoToo’s case or instructing the jury to draw an adverse inference from
WhoToo’s nondisclosure. The documents discovered by D&B were publically filed in a
state court proceeding—making these documents publically available is inconsistent with
an intent to suppress or hide them from discovery. As discussed below, sanctions may be
warranted, but not in the form of dismissal or an adverse jury instruction. The Court is
confident that this case can be resolved without resorting to unduly harsh remedies that
detract from the merits.
The Court, however, is troubled by two aspects of WhoToo’s conduct. First,
WhoToo’s counsel—who has twice conceded that this is not his “finest moment”—
ORDER – 3

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should have been aware of the need to produce the documents at issue. Dkt. ## 110 at
11, 14. He is counsel in both the state matter and the instant matter, yet he filed
documents advancing inconsistent positions: (1) in the state matter, the documents
indicate that the API developed by WhoToo was deficient, Dkt. # 104-2 at 6; (2) in the
instant mater, the documents assert that the API was functional, Dkt. # 95 at 4. Second,
WhoToo’s CEO testified in the instant matter that only minimal problems arose during
the development of the API, yet his own declaration testimony and emails filed in state
court undermine this position. Compare Dkt. # 67-2 at 48 with Dkt. # 104-2 at 6; Dkt. #
104-3 at 12, 16.
In lieu of dismissal or an adverse jury instruction, the Court finds that other
remedies may be warranted. For instance, at the hearing, D&B expressed the need to
reopen Rowlen’s deposition and re-brief summary judgment. Dkt. # 110 at 6. In addition
to permitting limited discovery, the Court notes that it may be appropriate for WhoToo to
bear the cost of such discovery and/or the briefing costs necessitated by its misconduct,
including the portions of summary judgment that require re-briefing.
The Court declines at this juncture to decide whether remedial measures are
appropriate. In the meantime, the Court will STRIKE the parties’ pending motions for
summary judgment. Moving forward, within seven (7) days from the date of this
Order, the parties are ORDERED to meet-and-confer and to take all reasonable steps
toward resolving this dispute without further judicial intervention. Within the same time
period, the parties are further ORDERED to file a joint submission apprising the Court
as to the outcome of the meet-and-confer. This joint submission, however, shall not
include the details of any settlement discussions. If the parties require further judicial
intervention following the meet-and-confer, the parties are ORDERED, within the same
time period for filing the joint submission, to each file a brief not exceeding five (5)
pages on the issue of whether remedial measures are appropriate as a consequence of
WhoToo’s nondisclosure, the legal authority for imposing such remedies, and, if they are
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warranted, what those remedies should include. Upon resolving this dispute, the Court
will issue a revised scheduling order setting the dispositive motions deadline, pretrial
deadlines, trial date, and any further deadlines necessitated by additional discovery.
V. CONCLUSION

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For the foregoing reasons, the Court DENIES D&B’s Motion for Relief from
Spoliation. Dkt. # 103. The Court STRIKES the parties’ pending motions for summary
judgment, Dkt. ## 60, 66, and ORDERS the parties to comply with the requirements
outlined above.

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DATED this 16th day of February, 2017.

A

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The Honorable Richard A. Jones
United States District Judge

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ORDER – 5