In this patent infringement action, plaintiff Performance Chemical Company (“PCC”) filed a motion for sanctions based on defendant, True Chemical Solutions (“True Chem”) concealing of evidence until a few weeks before trial.
In analyzing the motion, the district court noted that the allegations of misconduct were largely undisputed:
What distinguishes this case from the more “routine” situation where the Court has to determine whether the allegations of misconduct are true, is that PCC’s contentions of True Chem’s misdeeds are largely undisputed. It is really not in serious dispute that (a) True Chem hid material evidence, (b) True Chem disregarded and disobeyed not just normal discovery practices but a specific mandate from the Court to provide a complete frac trailer for inspection, (c) True Chem failed to preserve evidence and may have destroyed evidence by dismantling a trailer for the specific purpose of hiding evidence of automation, (d) True Chem filed a declaratory judgment action alleging non-infringement without sufficiently reviewing its own documents and emails, and (e) True Chem’s employees — no other phrase encapsulates it — lied under oath when asked direct questions about automation. The Court is therefore forced to conclude that True Chem acted deliberately and in bad faith.
Based on these allegations, the district court was left with the question of what sanction to impose. PCC sought the death penalty sanction.
In granting the motion for the death penalty sanction, the district court stated;
Despite the adversarial nature of our justice system, it has never blessed or condoned acts of deceit, concealment, or subterfuge. Instead, it provides a final and civil form of dispute resolution: judges or juries fairly weighing all of the relevant evidence to correctly resolve disputes between parties. Willful violations, such as the one before the Court today, risk undermining the strength and credibility of our judicial system. Adversarial litigation in our courts should not diminish a party’s integrity; if anything, it should strengthen it. True Chem’s conduct shows a blatant contempt for the Rules of Civil Procedure that govern litigation and a flagrant disregard for the Court’s order and the judicial process as a whole. Given the egregious conduct in this case, which persisted for over a year and might have gone undiscovered if not for sharp eyes diligently combing through 50,000 documents at the eleventh hour, the Court finds it can only adequately sanction True Chem’s behavior with a death-penalty sanction. Indeed, the Court believes that anything less, despite any assurances that True Chem might finally comply with this Court’s order and all future orders, could leave parties in other lawsuits feeling freer than Rule 37 contemplates these parties should feel to flagrantly flout the discovery orders of this Court. Id. Anything less than this most extreme sanction would not provide sufficient deterrence from similar behavior in other cases.
Accordingly, the district court granted the death penalty sanction because True Chem “violated the Court’s discovery in bad faith while demonstrating a clear record of contumacious conduct and delay, True Chem caused substantial prejudice to PCC, and less drastic sanctions are not appropriate in this case, the Court finds that it has no choice but to impose the most extreme of sanctions.”
Performance Chemical Co. v. True Chemical Solutions, LLC, Case No. W-21-CV-00222-ADA (W.D. Tex. May 20, 2021)
The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.