Opinion
Civil Action No. 01-CV-4340 (WJM).
October 1, 2004
Liza M. Walsh, Connell Foley LLP, Roseland, New Jersey, Attorney for Plaintiff.
Robert A. White, Morgan, Lewis Bockius LLP, Princeton, New Jersey, Attorney for Defendants.
LETTER OPINION
Dear Counsel:
This matter comes before the Court on defendants Samsung Electronics Co., et al.'s ("Samsung's") appeal of Magistrate Judge Hedges' July 7, 2004 and September 1, 2004 Orders imposing sanctions on Samsung for failing to comply with its discovery obligations. Samsung appeals the imposition of the following sanctions: 1) "an order that proof of infringement as to representative parts will determine infringement of all parts;" 2) "an order that defendants are precluded from challenging plaintiff's expert evidence as to the operation of the representative parts based on any assumptions made as part of performing simulations or other analyses of representative DRAMs;" 3) a jury instruction allowing the jury to draw an adverse inference of infringement; and 4) attorneys' fees associated with Magistrate Judge Hedges' finding of spoliation. MOSAID opposes the appeal.
(July 7, 2004 Order at 2).
( Id.).
The orders also impose attorneys' fees for Samsung's failure to produce schematics and simulation-related data. Samsung does not oppose that sanction. (Samsung Appeal Br. at 40 n. 26).
Because this Court seeks to expedite this case and begin trial on February 1, 2004, and since the litigation has been stayed until the Court rules on Samsung's appeal concerning representative parts and expert assumptions, the Court only resolves the appeal with regard to those two sanctions at this time. The appeal of the remaining sanctions, the adverse inference and attorneys' fees, will be resolved in a subsequent opinion. The Court, having considered the parties' submissions, adjudicates this matter on the papers. Fed.R.Civ.P. 78. For the reasons stated below, Samsung's appeal is DENIED, and the representative parts/assumptions sanctions are AFFIRMED, as MODIFIED.
(September 15, 2004 Order).
BACKGROUND
The essential facts underlying this appeal are undisputed. MOSAID filed this action against Samsung in 2001, alleging that Samsung's dynamic random access memory ("DRAM") chips infringe MOSAID's patents directed to word line drivers and voltage boost circuitry. During fact discovery, on March 18, 2002, MOSAID served on Samsung document requests seeking, in part, any schematics, completion reports, simulation-related data (e.g., netlists) and other technical documents concerning all of Samsung's allegedly infringing DRAMs. As Samsung acknowledges, throughout discovery, MOSAID "consistently sought production ofall final technical documents for all Samsung DRAMs as made and sold since 1995." (Samsung Appeal Br. at 8, emphasis in original).Fact discovery ended on May 31, 2003. At that time, Samsung's production of the requested documents was wanting. Samsung failed to timely produce, among other things, relevant schematics, completion reports and netlists. MOSAID pursued further discovery of the missing documents through motions to compel, and Magistrate Judge Hedges issued numerous orders requiring Samsung to flesh out its document production. Samsung, however, remained delinquent in its discovery obligations. It was not until after March 2004, when MOSAID filed its motion for sanctions, that Samsung finally began to fulfill its obligations. Beginning in May 2004, approximately one year after the close of fact discovery, Samsung retreated from its position that it had produced all responsive documents and began to supplement its document production. Subsequently, on a rolling basis, Samsung produced over 50,000 pages of responsive schematics, completion reports, netlists and other technical documents. Samsung's latest, supplemental document production occurred on September 17, 2004, the very same day Samsung filed its appeal seeking reversal of the discovery-related sanctions.
After Magistrate Judge Hedges entered the July 7, 2004 and September 1, 2004 Orders, granting MOSAID the sanctions listed above, Samsung timely filed its appeal.
DISCUSSION
I. Standard of Review
A district court may reverse a Magistrate Judge's order if it finds the ruling clearly erroneous or contrary to law. See 28 U.S.C. § 636(b)(1)(A); Fed.R.Civ.P. 72(a); L. Civ. R. 72.1(c)(1)(A). The district court is bound by the clearly erroneous rule as to findings of fact, while the phrase "contrary to law" indicates plenary review as to matters of law. Haines v. Liggett Group Inc., 975 F.2d 81, 91 (3d Cir. 1992).
Samsung argues that the Court should deviate from this standard of review and instead, conduct a de novo review of Magistrate Judge Hedges' orders. While recognizing that the representative parts/assumptions sanctions imposed for its discovery abuses are not dispositive of infringement, Samsung argues that they create a "potentially dispositive" conclusion of infringement, and thus warrant de novo review.
(Samsung Appeal Br. at 22).
Although Samsung may be correct that the representative parts/assumptions sanctions may influence the outcome of MOSAID's infringement claim, the Court does not find this to be a compelling reason to deviate from the clearly erroneous or contrary to law standard. Courts have recognized that even if a magistrate judge's order has the potential to materially affect the outcome of an issue, the order should still be reviewed under the more deferential standard. Lithuanian Commerce Corp. v. Sara Lee Hosiery, 179 F.R.D. 450, 456 (D.N.J. 1998) (reviewing a "magistrate judge's evidentiary determinations regarding expert testimony, even where they may ultimately affect the outcome of a claim or defense, as non-dispositive orders"). This makes sense, especially in this case.
Discovery disputes fall within the bailiwick of magistrate judges. See, e.g., Public Interest Research Group of New Jersey, Inc. v. Hercules, Inc., 830 F. Supp. 1525, 1546-47 (D.N.J. 1993), aff'd in part and rev'd in part, 50 F.3d 1239 (3d Cir. 1995) ("Particularly in discovery motions, a Magistrate Judge's Order is entitled to great deference in this District, since the Magistrate Judges have full authority to manage the civil cases and to determine all such matters of discovery and case management.") Magistrate Judge Hedges has been involved in the parties' contentious discovery battle since May 2003. He was inundated with countless briefs, letters, and other submissions when MOSAID sought to compel production of schematics, completion reports, netlists and other technical documents. He was swamped with submissions when MOSAID sought sanctions for Samsung's discovery flops. And he heard no less than four oral arguments on these matters. Magistrate Judge Hedges has deftly handled this monstrosity of a discovery dispute, and he acted well within his powers when he sanctioned Samsung for its discovery abuses. Fed.R.Civ.P. 72(a); see also Republic of Philippines v. Westinghouse Elec. Corp., 132 F.R.D. 384, 387 (D.N.J. 1990) ("United States Magistrates have broad discretion when deciding discovery motions. Their determinations may be overturned only if there is an abuse of discretion or legal error.") (quoting National Gateway Telecom, Inc. v. Aldridge, 701 F. Supp. 1104, 1119 (D.N.J. 1988)).
This is not a case where the magistrate judge ventured into the domain of the district court and disposed of a claim or defense. MOSAID requested, but was denied, a finding of infringement as to the 512M/1G parts for which Samsung refused to produce technical documents before the close of fact discovery. Consequently, the Court shall only set aside Magistrate Judge Hedges' orders if clearly erroneous or contrary to law.
II. Representative Parts/Assumptions
As discussed above, the violations in this case are pellucidly clear. Samsung had an obligation to produce relevant, responsive documents regarding schematics, completion reports, netlists and other technical documents. That obligation arose from MOSAID's documents requests and the Magistrate Judge's orders. Samsung, however, failed to comply with its obligations. Samsung attempts to justify its botched document production by arguing that the accused DRAMs are identical for purposes of this lawsuit and, therefore, MOSAID did not need any of the additional 50,000 pages that it has recently produced. That argument is misguided. It is not for Samsung to dictate to MOSAID what evidence it should and should not be able to rely upon to prove its case, especially when the Magistrate Judge stepped in and compelled Samsung to produce those documents. Samsung's disregard for the Magistrate Judge's orders, and its complete and utter failure to produce over 50,000 responsive pages of documents until after MOSAID moved for sanctions provides this Court with sufficient evidence to conclude that sanctions were warranted.
Samsung argued before Magistrate Judge Hedges numerous times that the "produced schematics are representative of non-produced schematics." (July 7, 2004 Order at 2). Regardless of Samsung's purpose for advancing that position, Magistrate Judge Hedges relied on Samsung's "virtually identical" argument when he granted the sanction of representative parts. Samsung does not dispute this. Indeed, it makes the very same argument — that almost all of its DRAMs are "basically the same" and "this case should be tried based on representative parts" — to this Court. (Samsung Appeal Br. at 3, 4, 8, and 18). Therefore, the Court agrees with Magistrate Judge Hedges that the representative parts sanction is appropriate.
The real dispute on appeal lies with MOSAID's ability to select the representative parts. Pursuant to the July 7, 2004 Order, MOSAID may choose the representative parts that it will base its infringement analysis on. If MOSAID chooses a DRAM for which Samsung has not produced all of the relevant technical documentation, MOSAID is also permitted to make assumptions "as part of performing simulations or other analyses of representative DRAMs," and Samsung cannot challenge those assumptions. (July 7, 2004 Order at 3).
Samsung vociferously argues that these combined sanctions work a terrible injustice because it never represented that all of its DRAMs are virtually identical. Rather, it insists that based on the Court's claim construction, which found that the Lines patents disclaimed the use of a double bootstrapping circuit as the pass transistor, there is an important distinction between DRAMs that use a PMOS transistor as the word line pass transistor and those that use an NMOS transistor. Under the Court's claim construction, Samsung asserts that all of its DRAMs that use an NMOS transistor as the pass transistor are non-infringing, leaving only the PMOS DRAMs as potentially infringing chips. Accordingly, it appears that Samsung argues that when it said its DRAMs were virtually identical, it meant that NMOS parts are only interchangeable with other NMOS parts, and PMOS parts are only interchangeable with other PMOS parts. ( See, e.g., Samsung Appeal Br. at 18 (stating that "the NMOS parts are interchangeable for purposes of MOSAID's patents")). Otherwise, according to Samsung, MOSAID could choose a DRAM with a PMOS pass transistor as representative of all DRAMs, and preclude Samsung from challenging the underlying assumption that a PMOS is representative of an NMOS, effectively and unjustifiably circumventing the Court's claim construction.
Samsung argues that out of over 90 accused DRAMs, only two use a PMOS transistor as the pass transistor.
Samsung characterizes that result as a "death penalty that would enable MOSAID to present meritless claims to a jury based on patently false `assumptions.'" (Samsung Appeal Br. at 3). The Court shares Samsung's concern. To allow MOSAID to choose a PMOS DRAM as a representative part for all of Samsung's DRAMs, which may include NMOS DRAMs within the scope of the double bootstrapping disclaimer, would effectively rewrite the scope of many of the asserted claims and potentially enable MOSAID to obtain a finding of infringement when it is not entitled to one. In order to avoid such a scenario, the Court will modify the representative parts sanction to require that MOSAID identify at least one NMOS DRAM as a representative part. Since the Court is confident that MOSAID would not have attempted to take advantage of the sanctions in a manner that circumvented the Court's claim construction, and since MOSAID did not deny that many of Samsung's allegedly infringing DRAMs use an NMOS transistor as the pass transistor, this slight modification of Magistrate Judge Hedges' July 7, 2004 Order should not be objectionable.
It is worth noting that under this modification, MOSAID retains the ability, if it so chooses, to select a PMOS DRAM as a representative part. However, in doing so, MOSAID may not conflate PMOS with NMOS DRAMs.
As modified, the sanctions cannot in all fairness be said to rise to the level of a "death penalty." They do not bestow upon MOSAID a finding of infringement. MOSAID must still prove that Samsung's NMOS and PMOS DRAMs infringe the patents in suit under the Court's claim construction, which includes the double bootstrapping disclaimer. Consequently, any argument by Samsung that this sanction is effectively a dismissal is inapt. Rather, the sanctions are appropriately and narrowly tailored to suit the violations in this case.
Samsung's last gambit to avoid the sting of the imposed sanctions is to propose that the Court restrict MOSAID's ability to choose which DRAMs are the representative parts. More specifically, Samsung proposes that the Court should order that:
1) MOSAID immediately identify two to three representative parts. . . .
2) MOSAID identify representative parts for which MOSAID has received the schematics, completion reports, and simulation data it claims were needed for its analysis, unless MOSAID can show that there is some compelling reason why another part, without completing documentation, would be more representative;
3) if MOSAID selects parts for which there are schematics, completions reports, and simulation data . . . then there will be no need for MOSAID to make "assumptions"; but
4) if MOSAID selects parts without complete documentation, the sanction should be modified so that the assumptions may be challenged. (Samsung Appeal Br. at 31).
Given the nature of Samsung's undisputed violations in this case, Samsung's proposal is rejected. First, the Court will not require MOSAID to immediately identify the representative parts. Samsung made the same request before Magistrate Judge Hedges, who denied it in an order dated August 5, 2004. That order was not appealed and, thus, that issue is not properly before the Court at this time.
Second, the Court will not require MOSAID to choose a representative part from among the DRAMs for which Samsung produced all the relevant technical documents. MOSAID is free to select any DRAM as a representative part, as long as it selects at least one NMOS DRAM. Allowing MOSAID to choose the parts it considers to be representative should help to ameliorate Samsung's failure to produce responsive, and potentially damaging documents that MOSAID would otherwise have had the ability to rely upon to prove its infringement case. To rule otherwise would unjustifiably reward Samsung for its inexcusably narrow document production.
Finally, Samsung's argument that "if MOSAID picks a device for which final documentation is missing, it can [circumvent the Court's claim construction] by having its experts improperly assume away the operation of the circuitry in the NMOS parts within the disclaimer," is no longer appropriate given the Court's modification of the Magistrate Judge's order. To the extent Samsung still argues that MOSAID should not be allowed to draw assumptions that Samsung cannot challenge, once again the Court must emphasize that to rule otherwise would be to reward Samsung for its inexcusable failures during discovery. Consequently, the Court affirms Magistrate Judge Hedges' order that Samsung is "precluded from challenging plaintiff's expert evidence as to the operation of the representative parts insofar as such challenges rest on any assumptions made as part of performing simulations or other analyses of representative DRAMs." (July 7, 2004 Order at 3).
(Samsung Appeal Br. at 22).
CONCLUSION
Samsung had an obligation to produce responsive schematics, completion reports and netlists before the close of fact discovery. It also had an obligation to produce those documents after being ordered to do so by Magistrate Judge Hedges. Samsung failed to satisfy those obligations. Samsung's recent production of over 50,000 responsive pages after MOSAID filed its motion for sanctions only serves to highlight Samsung's discovery shortcomings. In light of the above, there is ample evidence to support Magistrate Judge Hedges' imposition of sanctions. The sanctions of representative parts/assumptions are moderate, fair, and narrowly tailored to redress Samsung's violations. Accordingly, those sanctions as modified are hereby affirmed.
An appropriate Order accompanies this Letter Opinion.