*1 Presented to the Court in this trade secret misappropriation case is plaintiff Elite Semiconductor's motion for case terminating and other sanctions against defendants under Federal Rule of Civil Procedure 37. Elite asserts that defendants Anchor Semiconductor and Chenmin Hu have refused to comply with discovery orders, lied to Elite and the Court about discovery, and maintained unjustifiable refusals to produce documents and evidence. ECF 242 at p. 2. Elite demands a range of “severe” punishments for these alleged discovery transgressions:

Defendants oppose the motion and deny the request for sanctions. ECF 249. They assert that the lengthy and expensive discovery process in this case was caused by Elite's shifting and broad discovery requests and the challenges of collecting and producing discovery from China. ECF 249 at p. 5.

An important part of the procedural history of this case is that discovery has been managed by Special Master Wayne Brazil since his appointment on September 24, 2021. ECF 117. One of the central allegations in Elite's motion is that defendants have failed to comply with several of the Special Master's discovery orders.

The trial judge, District Court Judge Edward J. Davila, referred Elite's sanctions motion to me for a finding and recommendation under Federal Rule of Civil Procedure 72. ECF 265. This order is a finding and recommendation under Fed. R. Civ. P. 72(b)(1). Any party may serve and file specific written objections to this order and must do so within 14 days after being served with the recommended disposition. Fed. R. Civ. P. 72(b)(2).

I considered all the materials filed in connection with the motion (ECF 241-243 and 248-259) and held an in-person hearing on September 20, 2023. ECF 273. At the hearing, Elite provided a 3-page demonstrative exhibit that is a chronology of case events. Defendants objected to the exhibit as untimely disclosed. That objection is overruled. I find that the exhibit summarizes events that were already disclosed in the briefs and is not prejudicial to defendants.

The legal framework for this motion is provided by Fed. R. Civ. P. 37(b)(2)(A), which provides a range of available sanctions for not obeying a discovery order. Severe sanctions under Rule 37 such as dismissal or default are not appropriate “in the absence of willfulness, bad faith, or fault.” Fjelstad v. Am. Honda Motor Co., 762 F.2d 1334, 1340 (9th Cir. 1985). The possible sanctions include an order that the disobedient party, the attorney advising that party, or both to pay the reasonable expenses, including attorney's fees, caused by the failure to obey. Fed. R. Civ. P. 37(b)(2)(C). The Court also possesses “inherent authority” to sanction abusive litigation practices. Mark Indus. v. Sea Captain's Choice, 50 F.3d 730, 733 (9th Cir. 1995).

*2 Elite's motion for sanctions is broad: more than 500 pages of material. ECF 242, 258. And the charges are serious: “false claims and empty excuses” (ECF 258 at p. 5:6-7); “Defendants chose to defy this Court and to abide by the PRC's wishes” (ECF 258 at p. 6:13-14); and, unless sanctions are imposed, “the PRC would have succeeded in shielding another blatant trade secret theft.” (ECF 258 at p. 6:15).

But Elite's procedural foundation for this sanctions motion is fatally flawed.

First, Elite did not meet and confer with defendants before filing the motion. N.D. Cal. Civil Local Rule 37, in a section headlined “MOTIONS TO COMPEL DISCLOSURE OR DISCOVERY OR FOR SANCTIONS” mandates that “The Court will not entertain a request or a motion to resolve a disclosure or discovery dispute unless, pursuant to Fed. R. Civ. P. 37, counsel have previously conferred for the purpose of attempting to resolve all disputed issues.” Civil Local Rule 37-1(a). I find that Elite's motion is a discovery dispute that is covered by Local Rule 37. And the Civil Local Rule is consistent with the approach taken in this case by the Special Master. For example, in his most recent order before the sanctions motion, the Special Master twice ordered the parties to “meet and confer” on discovery issues. ECF 238, June 29, 2023 Master order.

At the hearing, I asked Elite's counsel John van Loben Sels to identify the meet and confer that preceded the sanctions motion. He identified two sources: (1) his declaration attached to the motion, ECF 242-1; (2) the hearings and orders by the Special Master. Neither is sufficient. Counsel's 33-page declaration is a detailed accounting of the discovery history in this case. What it notably lacks is a concluding section documenting Elite's efforts to confer before filing a motion for sanctions. I have also reviewed the 2023 discovery orders by the Special Master. ECF 193, 204, 209, 230, 231, and 238. Those orders do not demonstrate an invitation to a sanctions motion. The takeaway that I get from the Special Master's orders is that at the time of the orders discovery was ongoing and further communication and collaboration between the parties was expected. On this record, I find that Elite did not meet and confer about the sanctions motion. Under Civil Local Rule 37, the Court therefore “will not entertain” Elite's sanctions motion.

Second, Elite's sanctions motion is deficient because it does not itemize the attorney fees requested as required by Civil Local Rule 37-4(b)(3). That rule for Rule 37 sanctions requires: “If attorney fees or other costs or expenses are requested, itemize with particularity the otherwise unnecessary expenses, including attorney fees, directly caused by the alleged violation or breach, and set forth an appropriate justification for any attorney-fee hourly rate claimed.” Elite's motion does not itemize or justify the fees sought, merely approximating that it incurred “substantial costs in the hundreds of thousands of dollars.” ECF 242 at p. 32:5. Elite's unsupported request for an award of fees is denied.

Third, Elite requests an adverse inference jury instruction, but does not specify in its proposed order what instruction(s) it requests. ECF 242-3. The Court cannot approve an instruction that has not been proposed. Elite's request for an adverse inference instruction is denied.

Because Elite did not comply with the Civil Local Rules, did not meet and confer before filing its voluminous motion for sanctions, and did not itemize its request for attorney fees, I recommend denying the motion for sanctions in its entirety.

*3 Finally, I turn to the three sealing motions filed in connection with the motion for sanctions, ECF 241, 248, and 256. The parties agree, and the Court is persuaded that Civil Local Rule 79-5 is satisfied by “compelling reasons” to seal the materials identified in these three sealing motions for the reasons declared, with one exception. The exception is Exhibit S attached to the motion for sanctions in ECF 242. The declaration of Mr. van Loben Sels states that Exhibit S contains confidential source code, ECF 241-1, but defendants disagree. Elite will be allowed until October 4, 2023, to file a clarifying declaration seeking to seal Exhibit S; or a statement that it does not seek to seal Exhibit S. In the interim, Exhibit S will remain temporarily sealed.

At bottom, I recommend denying the motion for sanctions and granting the three motions to seal, with more information requested about Exhibit S.

IT IS SO ORDERED.