This matter comes before the Court by way of Plaintiffs Robotic Parking Systems, Inc. and Robotic Service Organization, LLC's (“Plaintiffs” or “Robotic”) motion for sanctions against Defendant City of Hoboken (“Hoboken”). (Docket Entry Number (“Doc. No.”) 180 (“Pls.' Moving Br.”).) Defendants City of Hoboken, John Corea and David Roberts (“Defendants”) oppose Plaintiffs' motion. (Doc. No. 186 (“Defs.' Opp'n Br.”).) Third-party Intervenors Unitronics, Inc. and Unitronics (1989) (R‘G) LTD (“Unitronics”) filed a position brief in response to Plaintiffs' motion. (Doc. No. 183 (“Unitronics' Br.”).)

For the reasons expressed below, Plaintiffs' motion is denied without prejudice.

All parties are well-versed in the underlying facts and, as such, the Court will address only those facts relevant to the instant motion. This matter involves allegations of copyright infringement, breach of contract, tortious interference and defamation. (Doc. No. 97.) Defendants filed counterclaims asserting negligence, breach of contract and the implied covenant of good faith and fair dealing, violations of the Consumer Fraud Act and Uniform Commercial Code and negligent misrepresentation. (Doc. No. 123.)

On May 27, 2008, after a case management conference, this Court granted Plaintiffs' request for access to the computers that operate the garage at issue (“Parking Garage”). (Doc. No. 83.) Defendants, however, failed to provide same and, instead, produced Robotics' computers that previously operated the Parking Garage. (Pls.' Moving Br. 4.) An analysis of the images taken of the aforementioned computers revealed that three laptops and two flash drives accessed Plaintiffs' servers. (Id.) Thus, Plaintiffs moved for an order granting access to the operating computer, as well as the newly-discovered three laptops and two flash drives that had accessed Robotics' system. (Id.) According to Plaintiffs, after several conferences and discovery disputes, a status conference was held on October 16, 2009, during which counsel for Unitronics confirmed “that the laptops are in the possession of Hoboken.... [and] that the laptops ‘unquestionably and for obvious reasons had access to the black server,’ and that it [Unitronics] gave the laptops to Hoboken.” (Id. at 6, quoting Transcript of 10/16/09 conference.) Again, after several letter submissions and conferences, including oral argument on Unitronics' motion for a protective order, the Court entered an Order on January 15, 2010 granting Plaintiffs access to the computers that operate the Parking Garage. (Id. at 6-8.) Unitronics appealed the decision and subsequently appealed the District Court's Order affirming same decision. Therefore, pending resolution of Unitronics' last appeal, the Court stayed the date by which the computers had to be produced in the interests of fairness and justice. (Doc. Nos. 150, 157 and 179.)

Plaintiffs request that this Court enter an Order, imposing the following sanctions:

(Pls.' Moving Br. 1.) Plaintiffs take the position that, until recently, Defendants never indicated that they do not have the three laptops or flash drives in their possession. (Id. at 2-9.) Thus, Plaintiffs characterize Defendants' position as “simply false and misleading.” (Id. at 2.)

Defendants, however, assert that they do not have the laptops in their possession and, as such, cannot possibly produce them. (See generallyDefs.' Opp'n Br.) In fact, Defendants' Chief Information Officer Patrick Ricciardi testified that Defendants never used a laptop at the Parking Garage. (Id. at 4.) Defendants subsequently advised Plaintiffs that the laptops were not in their possession, as memorialized in an email message dated January 27, 2010. (Id. at 5.) As the laptops that accessed the server are identified as “Robo,” it is more likely that the laptops are owned by Robotics and that they are currently in Plaintiffs' possession. (Id. at 5.) Defendants argue that the fact that the “Robo” laptops accessed the server supports Defendants' claims “that Plaintiffs illegally accessed the garage desktop servers after they were removed from the [Parking] Garage, from an apartment across the street that they leased.” (Id.) Defendants assert that such an infiltration “logically accounts for why an inspection of the desktop servers would reveal that a ‘Robo’ laptop accessed the server.” (Id.)

Finally, Unitronics asserts that Plaintiffs mischaracterize the facts of this matter and inappropriately expand the scope of this Court's previous rulings by stating that this Court required Unitronics, and not just Defendants, to produce the laptops and relevant flash drives. (Unitronics' Br. 1-2.) According to Unitronics, it “has never seen the laptops at issue.” (Id. at 4.) As for Plaintiffs' assertion that Unitronics' counsel conceded that the laptops were in Defendants' possession, Unitronics responds that Plaintiffs' characterization is false and misleading. (Id. at 5.) Unitronics' counsel merely indicated that “he understood that the laptops were in the possession of the City” and defense counsel thereafter responded “that he had ‘no idea’ where the laptops were.” (Id.)

Under Rule 37, if a party fails to comply with a discovery order entered by a court, the court may enter a further, just order:

Fed. R. Civ. P. 37(b)(2)(A). In lieu of or in addition to the aforementioned, a court must also “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.” Id. at 37(b)(2)(C).

*3 Here, as a result of Defendants asserting that they do not have the laptops and flash drives at issue, Plaintiffs first ask the Court to find that Hoboken copied “Robotic software off the servers and onto the laptops and flash drives, and it continues to possess and use the Robotic software today.” (Pls.' Moving Br. 10.) The Court, however, finds that such a ruling would be premature and inappropriate at this stage of the proceedings. Defendants have certified to this Court that they do not possess the laptops or flash drives at issue and this Court has no reason to believe that such assertions are misrepresentations. Thus, the Court denies without prejudice Plaintiffs' request that the Court designate the facts as claimed by the Plaintiffs to be true. However, the Court finds good cause to require Hoboken to submit a sworn certification to Plaintiffs that sets forth the following: (i) efforts undertaken to identify and locate the three laptops and two flash drives identified by Plaintiffs; (ii) that despite the aforementioned efforts, the laptops and flash drives have not been found; and (iii) that the laptops and flash drives are not in any of the Defendants' custody, possession or control, including that of their agents, employees or the like.[1]If warranted, Plaintiffs may file a motion in limine for spoliation of evidence and request an adverse inference at the appropriate stage of the proceedings, which may be included in the joint proposed final pretrial order.

Regarding Plaintiffs' request that this Court hold Hoboken in contempt, again, this Court finds that such a ruling at this juncture is unwarranted. While a valid court order existed that Defendants were aware of, the Court does not find that Hoboken purposefully or negligently disobeyed the order. As Defendants take the position that they do not have the laptops and/or flash drives in their possession, Hoboken was simply unable to produce them for Plaintiffs' inspection. Moreover, as Unitronics' appeal regarding inspection of all relevant computers is currently pending, a finding of contempt and issuance of sanctions would be inappropriate. Thus, the Court finds that Hoboken's “failure” was substantially justified and does not warrant a finding of contempt or imposition of per diem sanctions. Again, if at a later stage of the proceedings the Plaintiffs deem it necessary to file a motion in limine, Plaintiffs may do so at the appropriate time.

Finally, as this Court does not find that Hoboken disobeyed a discovery order, mandatory sanctions for attorney's fees and costs are not warranted. To the extent it can be held otherwise, the Court finds that Hoboken's failure to obey any such order was substantially justified insofar as Defendants take the position that they do not have the items at issue in their possession and, as such, could not comply. While Defendants should have advised this Court about their position, the Court nonetheless finds that this information was made clear to Plaintiffs by way of various communications from at least January 2010 to the present. Therefore, Hoboken's failure to notify the Court does not change the undersigned's ultimate findings and conclusions.

For the foregoing reasons, and for good cause shown, it is ORDERED that:

If, upon review of such efforts, Hoboken discovers that the laptops and/or flash drives are in Defendants' possession, it shall immediately notify this Court.