The Court enters the following orders: (1) Plaintiff’s request for monetary sanctions for unjustifiably late produced documents as described below is GRANTED, (2) Plaintiff’s request for additional discovery regarding recently produced documents and emails is DENIED without prejudice as outside the scope of the pending Motion and in effect an improperly presented new motion without any meet and confer, and (3) the parties are ORDERED to file a Joint Stipulation Re Alleged Spoliation within 7 days of this Order regarding Sivantos’ apparent destruction of TeleCare prototype ESI created in the 2015-2017 time period. The parties are directed to address what evidentiary sanctions, if any, should be imposed regarding the loss of TeleCare prototype ESI.

Background

Plaintiff served Requests for Production of Documents on June 19, 2018.[1] These Requests, most notably, sought documents and ESI regarding the development and design of Sivantos’ TeleCare product. (Dkt. 231 at 1 and 2.) Plaintiff moved to compel production of the requested documents on August 31, 2018. (Dkt. 204.) Sivantos claimed they had produced all responsive documents. (Dkt. 231 at 1.) On October 1, 2018, however, this Court entered an order finding that Defendants had not provided convincing information that they had produced all responsive documents to all Requests. (Dkt. 231 at 2.) The Court ordered Sivantos “to produce all (not some) documents in their custody, control and possession responsive to all Requests,” including TeleCare ESI. (Dkt. 231 at 3.) The Court also ordered Sivantos to provide a verification under oath and subject to penalty that all non-privileged documents responsive to the Requests had been produced. (Dkt. 231 at 1-2.)

On October 23, 2018, Plaintiff filed a Motion for Sanctions against Sivantos for failure to comply with this Court’s October 1, 2018 Order. (Dkt. 246.) Defendants claimed to have complied with the October 1, 2018 Order. (Dkt. 257-1.) This Court generally denied the Motion for Sanctions (Dkt. 257-1) as Sivantos had made TeleCare source code and ESI available on August 18, 2018. (Dkt. 257-4.) Sivantos’ source code included: (1) different versions of Telecare, including the Signia my Hearing App, Connexx and Telecare portal, (2) the source code, binary code and other native ESI of TeleCare and (3) prior versions of the TeleCare code, including the versions released to Apple and Google to include on their respective software application stores. (Eichinger, Dkt. 336-6, ¶¶ 3-11.) The Court did require Sivantos to provide a stronger, less equivocal verification that all documents responsive to the Requests had been produced. (Dkt. 257 at 6-7.)

*2 On December 31, 2018, Plaintiff filed the instant Motion for Sanctions that is the subject of this Order. Plaintiff alleged that Sivantos had not produced all documents responsive to Plaintiff’s Requests, contrary to Sivantos’ representations and verifications. (Dkt. 296.) More specifically, a Sivantos witness testified in deposition that TeleCare prototypes had been created in the 2015-2017 time period but were not produced. (Dkt. 330 at 4.) The witness also testified that Sivantos likely overwrote the code so that the prototype ESI may no longer exist, raising an issue of spoliation. (Dkt. 330 at 5.) In a February 8, 2019 Order (Dkt. 330), the Court stated that it did not believe Sivantos had acted in bad faith but also noted it lacked sufficient information to make any ruling on the issues of production compliance, prejudice and less drastic sanctions than those requested. (Dkt. 330 at 6.) The Court ordered additional briefing to determine whether TeleCare prototype ESI “was lost and is now irretrievable.” (Dkt. 330 at 6.) The Court specifically reserved the issue of monetary sanctions. (Dkt. 330 at 12.)

Plaintiff’s expert Dan Manheim inspected Sivantos’ source code on February 19, 2019 and found no evidence of prototypes. (Dkt. 333 at ¶¶ 5, 6 and 8.) He also discovered that Sivantos’ TeleCare source code came from a larger version control repository. (Dkt. 359 at 2.) In its March 12, 2019 Order, the Court rejected Sivantos’ assertion that Plaintiff’s Requests did not include Sivantos’ file repository. (Dkt. 359 at 2.) The Court stated, “These contentions are disingenuous evasions of a much more fundamental point. Sivantos was obliged to search any space in its custody, control and possession for TeleCare of conception, development and design and to produce any TeleCare ESI not otherwise produced.” (Dkt. 359 at 2.) Sivantos’ witness Eichinger testified at his deposition that he never searched the repository. (Dkt. 359 at 3, Dkt. 349-1, Ex. A.) As the Court did not believe the repository had been searched for TeleCare ESI by anyone, the Court ordered a search. (Dkt. 359 at 3.)

Additionally, Sivantos’ source code contains only three undated snapshots of TeleCare ESI. (Dkt. 359 at 3-4.) A Sivantos’ witness testified that the repository contains thousands of dated snapshots of TeleCare ESI. (Dkt. 359 at 3-5.) The Court ordered Sivantos to search the repository and make available any TeleCare ESI located. (Dkt. 359 at 3.) The Court also ordered production of dated versions of snapshots. (Dkt. 359 at 4.) The Court further ordered a search for TeleCare prototype ESI. (Dkt. 359 at 5.) The Court indicated that, because of the pending unresolved production issues, the Court still could not address what sanctions, if any, should be imposed on Sivantos. (Dkt. 359 at 8.)

On March 22, 2019, Mr. Eichinger provided a declaration addressing the above searches. (Dkt. 368.) Significantly, he stated that he searched for TeleCare prototype ESI from 2015-2017 but did not find any. (Dkt. 368 at 3, ¶ 4.) On March 22, 2019, Sivantos made available its entire source code repository. (Dkt. 398 at 6.) On March 25, 2019, the Court issued a ruling based on Mr. Eichinger’s declaration:

(Dkt. 369.)

Plaintiff asserts that Sivantos produced source code printouts requested by Mr. Manheim on March 30, 2019, April 6, 2019 and April 19, 2019. (Dkt. 398 at 8 n.3.) Plaintiff also asserts that during depositions of Sivantos’ witnesses on March 27 and 29, 2019 Sivantos produced hundreds of pages of additional technical documents concerning the development and design of the TeleCare software. (Dkt. 398:8; Dahlberg, 398-1, ¶¶ 2-11.) Plaintiff further states Sivantos produced additional documents by email. (Dkt. 398-1, ¶ 12, Ex. E.) Plaintiff asserts that she has not had an opportunity to depose Sivantos’ witnesses regarding these recently produced documents and accordingly seeks additional discovery.

*3 Plaintiff agrees that Sivantos produced the entire TeleCare dated source code on March 22, 2019. (Dkt. 398 at 6:24-26.) Plaintiff also agreed that Sivantos is now in compliance with the Court’s Orders regarding production of source code. (Dkt. 398 at 8:23-25.)

On April 10, 2019, the Court ordered the parties to file a Joint Status Update on Sivantos’ compliance with the Court’s Orders of March 12, 2019 (Dkt. 359), March 15, 2019 (Dkt. 364) and March 25, 2019 (Dkt. 369.) The Joint Status Update was filed on April 24, 2019. (Dkt. 398.) As Sivantos has completed its discovery production, the Court now can turn its attention to Plaintiff’s Motion for Sanctions.

Relevant Federal Law

Plaintiff’s Motion is partly based on Fed. R. Civ. P. Rule 37(b), setting forth available sanctions for failure to comply with a court order. Specifically, Plaintiff seeks the following sanctions:

(Dkt. 296.)

Sivantos contends that the evidentiary and issue preclusion sanctions amount to terminating sanctions which are considered “a harsh penalty and [are] to be imposed only in extreme circumstances.” Lopez v. Pama Mgmt, Inc., 2017 WL 4685009*3 (C.D. Cal.) In the Ninth Circuit, terminating sanctions under Rule 37(b) are only appropriate where “willfulness, bad faith or fault” are demonstrated. Hester v. Vision Airlines, Inc., 687 F.3d 1162, 1169 (9th Cir. 2012). In determining whether terminating sanctions are appropriate, a court must consider (1) the public’s interest in expeditious resolution of litigation, (2) the court’s need to manage its own docket, (3) the risk of prejudice to the party seeking sanctions and (4) the public policy favoring disposition of cases on their merits and (5) the availability of less drastic sanctions. Lopez *2; Malone v. United States Postal Service, 833 F.2d 128, 130 (9th Cir. 1987).

Plaintiff also seeks monetary sanctions pursuant to Rule 37(a)(5)(A). Additionally, Plaintiff invokes the Court’s inherent authority to sanction a party for discovery abuse and to enforce its own orders. National Corp. Tax Credit Funds III, VI, VII v. Potashnik, 2010 WL 457626*4 (C.D. Cal.)

Analysis

Sivantos plainly violated this Court’s Orders of October 1, 2018 and November 13, 2018. The October 1, 2018 Order required Sivantos to produce “all (not some)” documents responsive to all of Plaintiff’s Requests for Production within 10 days. (Dkt. 231 at 3.) This command specifically included ESI regarding the development and design of TeleCare. (Dkt. 231 at 2.)

*4 Sivantos made a major TeleCare ESI production of TeleCare source code on August 18, 2019. Sivantos represented on two occasions that they had produced all responsive documents. (Dkt. 231 at 1; Dkt. 257 at 1.) Sivantos twice provided verifications under oath that all responsive documents had been produced. (Dkt. 257 at 6-7.) Sivantos’ representations and verifications, as it turns out, were not true.

Sivantos failed to disclose the existence of its version control repository or to search it. (Dkt. 359 at 2-3.) Sivantos had produced only three undated snapshots of the TeleCare source code, which made it impossible to know which versions of TeleCare were produced when. (Dkt. 359 at 3-4.) The version control repository contained thousands of dated snapshots of TeleCare source code. (Id.) Sivantos has now produced its version control repository and the dated snapshots. (Dkt. 369.) Needless to say, Sivantos’ failure to disclose the existence of the version control repository and to search it, and to produce the dated snapshots, were major discovery violations, most notably of the command to produce TeleCare ESI in the Court’s October 1, 2018 Order.

Sivantos failed to provide any convincing justification for its failure to disclose its version control repository and the documents contained therein. The Court rejected Sivantos’ assertion that Plaintiff’s Requests did not require Sivantos to produce the version control repository and their assertion that the Protective Order prohibited inspection of the repository using the internet. (Dkt. 359 at 2.) The Court stated, “ These contentions are disingenuous evasions of a much more fundamental point. Sivantos was obliged to search any space in its custody, control and possession for TeleCare ESI of conception, development and design and to produce any TeleCare ESI not otherwise produced.” (Id.) Sivantos ultimately produced its version control repository containing thousands of relevant documents, including dated snapshots of source code. Sivantos’ technical arguments miss the point that, even if the repository was withheld, the documents it contained should have been produced just as other TeleCare source code was produced on August 18, 2018.

Plaintiff contends that the failure to disclose and produce the version control repository and its dated snapshots were not Sivantos’ only discovery violations. Plaintiff asserts that numerous documents and emails concerning TeleCare conception, design and development were produced only recently. Plaintiff argues that these late produced documents also violated this Court’s orders and that Plaintiff has had no opportunity to depose Sivantos’ witnesses about these documents and emails.

Plaintiff seeks evidentiary and issue preclusion sanctions pursuant to Fed. R. Civ. P. Rule 37(b) for violations of this Court’s Orders of October 1, 2018 and November 13, 2018. The Court’s approach, however, has been to compel compliance and further discovery to prevent or mitigate any prejudice from any discovery violations, while imposing or reserving monetary sanctions for violations so as to achieve the judicial policy favoring determinations on the merits. With one possible exception, the Court will continue with its approach.

The Court makes the following observations, findings and rulings:

1. Monetary Sanctions. Sivantos plainly violated this Court’s orders in regard to its late production of its version control repository and the dated snapshots contained therein. Those violations unfairly imposed on Plaintiff the costs necessary to obtain Sivantos’ compliance with Plaintiff’s Requests and with this Court’s orders. The Court finds that Sivantos’ violations were not substantially justified as noted above. Plaintiff is entitled to monetary sanctions pursuant to Rule 37(a)(5)(A). The Court also rests its decision on Rule 37(b)(2)(C) and Rule 37(d)(3)which provide that the Court may order monetary sanctions instead of or in addition to terminating and evidentiary sanctions. Plaintiff may file an appropriate motion for attorneys’ fees in due course limited to Sivantos’ failure to produce the version control repository and dated snapshots.

*5 2. Further Discovery. Plaintiff indicates that she has not had an adequate opportunity to depose Sivantos’ witnesses regarding new source code printouts requested by Dan Manheim or the new documents and emails produced during recent depositions. Plaintiff has noticed a Rule 30(b)(6) deposition to which Sivantos has objected. (Dkt. 399-1.) Sivantos argues that the new documents were only recently created, produced in response to new discovery requests or in accordance with Court orders or already produced previously but done so again out of an abundance of caution. (Id.) Plaintiff’s request for additional discovery is outside the scope of this Motion and in effect a new motion requiring a meet and confer which did not occur. Accordingly, the Court DENIES Plaintiff’s request for additional discovery without prejudice. Plaintiff will have to file a proper Rule 37 motion after meeting and conferring with Sivantos, if deadlines permit.

3. TeleCare Prototype ESI. Sivantos searched its version control repository for TeleCare prototype ESI and found none. Sivantos’ Eichinger testified at deposition that several different prototypes of TeleCare were created between 2015 and 2017, consisting primarily of software, source code and binaries. (Dkt. 330 at 4.) Plaintiff asserts that TeleCare prototype ESI is highly relevant because it is evidence of the state of TeleCare’s development before and after Plaintiff’s presentation of her HARP technology in 2016. Sivantos indicates that software is routinely overwritten and that the TeleCare prototype ESI likely no longer exists. (Dkt. 330 at 5.) The TeleCare prototype ESI were not retained because no litigation had occurred yet (Dkt. 359 at 4-5), according to Sivantos’ Eichinger. Plaintiff disputes whether Sivantos were obliged to retain the material.

The Court ORDERS the parties to file a Joint Stipulation Re Alleged Spoliation within 7 days of this Order. The Court wants the parties to present both facts and legal authority bearing on Sivantos’ failure to retain TeleCare prototype ESI in a stand alone pleading that makes no reference to prior pleadings that discussed spoliation. In particular, the Court wants to know what relief, if any, is or would be or should be available in the event the evidence supports Sivantos’ assertion that no litigation or threat of litigation existed when the prototype ESI was overwritten, and thus there was no obligation to retain the TeleCare prototype ESI. In other words, even if Sivantos properly overwrote the prototype ESI, should there be some restriction on Sivantos’ evidentiary presentation at trial in view of the fact that Sivantos did not retain the TeleCare prototype ESI?

The Court also would like the parties to summarize what information and documents do exist regarding the TeleCare prototypes and what exactly Sivantos intends to present in the way of testimony and evidence about the prototypes at trial. The Court wants to know what prejudice, if any, occurred to Plaintiff from the loss of the TeleCare prototype ESI, particularly if the facts indicate that the 2015-2017 TeleCare prototypes did not contain any or all of Plaintiff’s trade secret ideas and concepts.

The Court wants the parties to propose possible forms of an order that would restrict Sivantos’ evidentiary presentation at trial regarding TeleCare Prototype ESI. The Court stresses that it has made no decision on whether any evidentiary sanctions should be imposed for the loss of the TeleCare prototype ESI.

The full text of the Requests is set forth in Dkt. 205-1 and 205-2.