Court Orders Compliance and Payment of Other Party’s Attorneys’ Fees, Costs When Party Uses Spurious Arguments Opposing Discovery

9 May 2018

In Cen Com, Inc. v. Numerex Corp., No. C-170650-RSM, (Dist. Court WD Washington, 2018), a breach of contract case, Numerex Corp., (“Defendant”) and Cen Com, Inc. (“Plaintiff”) are businesses in the alarm-monitoring industry, and worked together for several years. That business relationship involved the Plaintiff monitoring Defendant’s accounts and responding to alarm signals from those accounts to summon the appropriate first responders. Plaintiff Cen Com offered to sell data to Defendant, but the sale never consummated. Instead, the parties entered into a deal whereby Plaintiff agreed to act solely as an intermediary, by forwarding Defendant’s alarm signals to a third party. In this action, Plaintiff  sued Defendant on multiple claims, including the following: breach of contract, negligence, fraud, negligent misrepresentation, tortious interference with business expectancy, conversion (stolen data), violation of the Consumer Protection Act, unjust enrichment, aiding and abetting, and trade secret misappropriation.

During the course of litigation, the Plaintiff requested sanctions, claiming that documents designated by Defendants as confidential or for attorney’s eyes only and the subject of a pending protective order motion, and continued to seek sanctions for the time period that it alleges Defendants were not in compliance with the stipulated ESI Order.  The Plaintiff also objected to the subpoenas issued as part of discovery, saying they were too broad, and an improper attempt to get information from a party employee. Plaintiff also claimed the subpoenas were unduly burdensome and the costs outweighed the potential for relevant information. Defendant filed motions to compel the production pursuant to the subpoenas, and  further to compel Plaintiff to use specific electronic search terms related to a 2012 consent decree that Plaintiff had signed, and requested attorneys’ fees and costs for bringing its motions.

The Court rejected Plaintiff’s arguments in short order, pointing out that Plaintiff based its position on the former FRCP Rule 26 standards rather than the standards set out in the current Rule 26, which provides that discovery must be: (1)  relevant to the claim; (2) proportional to the needs of the case; (3) take into account the parties’ access to relevant information and available resources; (4) take into consideration the importance of the discovery in resolving the matter; and (5) balance whether the burden or expense of discovery outweighs its likely benefit.

The Court further noted that under Rule 37, “The party who resists discovery has the burden to show that discovery should not be allowed, and has the burden of clarifying, explaining, and supporting its objections.” The Court found that given these Rule 37 requirements, the Plaintiff did not sufficiently explain why the documents should not be the subject of discovery (were not relevant), or why a search of the documents would be unduly burdensome.  Also, the Court further found that the only explanation offered by Plaintiff was an unsupported statement that the documents requested “do not concern this matter and could not lead to relevant information.”

The Court denied Plaintiff’s motions and sanctions requests, and granted Defendant’s discovery motions, and requests for fees and costs.