eDiscovery Assistant

MGI Dig. Tech. S.A. v. Duplo U.S.A. Corp.

2023 WL 8895701 (C.D. Cal. 2023)

November 16, 2023

Carter, David O., United States District Judge

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Summary

The court addressed a dispute over the production of ESI related to MGI's sales and profitability in the United States. The defendant argued that MGI intentionally and selectively destroyed documents, resulting in prejudice to their ability to evaluate MGI's claim for lost profits. However, the court found that the defendant did not provide sufficient evidence of bad faith or intent to deprive them of evidence, and therefore denied their request for spoliation sanctions.

Additional Decisions

MGI DIGITAL TECHNOLOGY S.A., Plaintiff,
v.
DUPLO U.S.A. CORPORATION, Defendant

Case No. SA CV 22-00979-DOC-KES

United States District Court, C.D. California, Southern Division

Filed November 16, 2023

Counsel

Don J Mizerk, Husch Blackwell LLP, Sacramento, CA, Jennifer E. Hoekel,Kara R. Fussner, Husch Blackwell LLP, St. Louis, MO, John A. Carnahan, Philip D. Segrest, Jr., Husch Blackwell LLP, Chicago, IL, Mhare Ohan Mouradian, Husch Blackwell LLP, Los Angeles, CA, for Plaintiff.
John T. Johnson, Christopher S. Marchese, Tyler Richard Train, Fish and Richardson, Los Angeles, CA, Jacqueline Tio, Fish and Richardson PC, Atlanta, GA, Jeffrey Mok, Mohammad Reza Kameli, Fish and Richardson PC, New York, NY, for Defendant.

Carter, David O., United States District Judge

ORDER SUSTAINING IN PART AND OVERRULING IN PART DEFENDANT'S OBJECTIONS TO SPECIAL MASTER'S ORDER NOS. SM-14 AND SM-15 [170]

INTRODUCTION

*1 Before the Court is Defendant Duplo U.S.A. Corporation's Objections to Special Master's Order Nos. SM-14 and SM-15 (Dkt. 170) (“Objs.”). Also before the Court are Plaintiff MGI Digital Technology S.A.'s opposition (Dkt. 177-1) (“Opp'n”) and Defendant Duplo's reply (Dkt. 182-1) (“Reply”). The Court heard oral arguments on November 14, 2023.

I. BACKGROUND

In this patent infringement action, Defendant objects to the following five findings by the Special Master:

(a) denying-in-part Defendant's motion to compel certain Konica Minolta printhead documents;
(b) denying Defendant's motion to compel Kyocera printhead documents;
(c) denying Defendant's motion to compel documents relating to work done by the University of Valence ESISAR (“ESISAR”);
(d) denying Defendant's motion to compel an additional deposition of Plaintiff's President, Edmond Abergel (a named inventor of the patents-in-suit); and
(e) denying Defendant's request for spoliation sanctions for documents destroyed when a subsidiary distributor, MGI U.S.A., dissolved in 2021.

Defendants submitted these motions to the Special Master on August 30, 2023, and the Special Master received written briefing and held a hearing on September 12, 2023, entered Special Master Order No. SM-14 on September 14, 2023 (Dkt. 155-1) (“SM-14), received supplemental briefing on certain issues, and entered Special Master Order No. SM-15 on September 27, 2023 (Dkt. 160-1) (“SM-15”).

II. LEGAL STANDARD

This Court reviews de novo the findings of fact and conclusions of law made or recommended by the Special Master. Tatung Co., Ltd. v. Hsu, No. SA CV 13-1743-DOC (ANx), 2016 WL 3475327, at *1 (C.D. Cal. Apr. 6, 2016); Fed. R. Civ. P. 53(f).

III. DISCUSSION

A. Konica Minolta Printhead Documents

In SM-14, the Special Master granted-as-modified Defendant's motion by ordering “Plaintiff shall produce all Konica Minolta drive board manuals and operation manuals that are in Plaintiff's possession, custody, or control (regardless of date).” SM-14 at 12–14 & 37.

Defendant argues:

SM-14 incorrectly, however, placed the burden upon Defendant to identify, with specificity, the types of Konica Minolta printhead documents Defendant sought to compel. Only MGI has knowledge of documents that continue to be withheld. MGI also never provided any declaration of a knowledgeable witness describing the time, effort, or burden associated with producing such documents.
* * * That MGI has produced only a subset clearly indicates a selective, incomplete production.

Objs. at 10.

Plaintiff responds that, in Special Master Order No. SM-11 (Dkt. 126-1) (“SM-11”), “[t]he Special Master considered and incorporated Duplo's delay in seeking documents in rendering the relief he granted.” Opp'n at 4. In SM-14, the Special Master found that Defendant's request for additional relief regarding Konica Minolta printhead documents “can be reasonably framed as a request to ensure full compliance with SM-11,” and the Special Master ordered production of “drive board manuals and operation manuals.” SM-14 at 14 & 37.

*2 Plaintiff submits that “MGI complied with this order, conducted additional searches, found no further drive manuals or operation manuals, but did produce all additional materials in good faith that could be located, including even Konica Minolta ‘Technical Notes’ and ‘Specification Notes’ that are well beyond the ‘drive manuals’ and ‘operation manuals’ that were the subject of the Special Master's Order.” Opp'n at 5. Plaintiff argues that “the Special Master's compromise in allowing discovery of the documents that explain the operation of the printhead, especially considering the lateness of the request, was entirely proper and should be upheld.” Id. at 7.

Defendant replies that any and all Konica Minolta printhead documents should be produced because “the Konica Minolta printhead was on sale prior to the alleged inventions, and its features disclose exactly that which MGI alleged it invented over the prior art before the PTO.” Reply at 6. Defendant also argues that “MGI did not conduct a reasonable search” because “MGI did not have Edmond Abergel—the MGI employee most knowledgeable about Konica Minolta dealings—produce his Konica Minolta printhead documents.” Id. at 7.

Defendant does not persuasively demonstrate that Plaintiff is withholding any relevant documents that have any probative value. As to any other non-produced documents that might bear some tangential relation to the technology here at issue, Defendant does not justify departing from the Special Master's balanced approach in granting limited relief in response to Defendant's broad motion at the close of fact discovery.

Defendant's objection to the Special Master's denial of Defendant's request to compel additional Konica Minolta printhead documents is therefore overruled.

B. Kyocera Printhead Documents

In SM-14, the Special Master denied Defendant's motion as to non-Konica-Minolta printhead documents, finding that “[o]n balance, although information regarding all printheads is conceivably of some relevance, Defendant has not made a sufficient showing of potential probative value to justify the massive scope of additional production Defendant is requesting,” and “the burden that Defendant seeks to put on Plaintiff in this regard is simply not ‘proportional to the needs of the case.’ ” SM-14 at 24–25 (quoting Fed. R. Civ. P. 26(b)(1)).

In proceedings with the Special Master, Defendant did not emphasize the Kyocera printheads but rather included them together with Defendant's request for documents regarding “Kyocera, Spectra, Xaar, Toshiba, Picojet, Trident, Ricoh, and HP printheads.” Id. at 23.

Defendant objects that the Kyocera printhead is particularly important because: (1) the accused products use Kyocera printheads; and (2) after the Special Master entered SM-14, Plaintiff served an expert report in which it now relies on newly produced Kyocera printhead documents. Objs. at 4–5.

Plaintiff responds that Defendant “cannot raise entirely new arguments for the first time on an objection to a Special Master's Report.” Masimo Corp. v. Apple Inc., No. SA CV 20-00048 JVS (JDEx), 2022 WL 18285003, at *1 (C.D. Cal. Nov. 16, 2022) (Selna, J.) (citation omitted). Plaintiff also argues that, in any event, “Duplo's accused printers use Kyocera printheads, so Duplo (or its Japanese parent and manufacturer) is already in possession of whatever Kyocera documents it may require to understand the operation of Kyocera printheads.” Opp'n at 7.

Plaintiff argues that “documents located pursuant to MGI's expert's investigation into the operation of the Kyocera printheads were properly relied upon and do not trigger a wholesale production of documents relating to Kyocera printheads (which Duplo Corporation of Japan inevitably possesses anyways)” because the search for the Kyocera documents in MGI's possession came about only because of testimony by a Duplo witness. Opp'n at 7–8.

*3 Having successfully opposed Plaintiff's request for Kyocera printhead documents (based on Defendant's lack of control over documents possessed by a related company in Japan, Duplo Corporation) (see Dkt. 136, Aug. 24, 2023 Order), Defendant's request to compel Plaintiff to produce such documents rings hollow, particularly given that the request to compel Kyocera printhead documents was presented to the Special Master with no particularity but rather as part of a broad request for documents regarding printheads from numerous different manufacturers. See SM-14 at 22–25. Further, any purported prejudice to Defendant is mitigated because Defendant's own products use Kyocera printheads. Finally, Plaintiff has already produced whatever Kyocera documents its expert is relying upon. See Opp'n at 7–8.

Defendant's objection to the Special Master's denial of Defendant's request to compel additional Kyocera printhead documents is therefore overruled.

C. ESISAR Documents

Defendant presented this motion to compel regarding ESISAR as part of its request to compel documents regarding Kyocera printheads (among others, as noted above), and SM-14 denied this motion together with the rest of Defendant's request for documents regarding Kyocera, Spectra, Xaar, Toshiba, Picojet, Trident, Ricoh, and HP printheads. See SM-14 at 22– 25. Defendant argues:

MGI engaged the services of engineers at the University of ESISAR as part of developing its alleged inventions, including to analyze inkjet printheads available on the market at the time. According to MGI's chief technology officer, MGI continues to work with ESISAR on its technologies “to this day.” (Ex. 8 (Renaud 9/14/23 Tr.) at 170:16–171:4.) But MGI produced only a select few documents from ESISAR concerning its analysis of printhead technology. (Id. at 170:5–171:4, 186:10–187:8.)
MGI's infringement theories as to all asserted claims rely upon printhead technology— evidenced by at least MGI's infringement report. (Ex. 21 (MGI Infringement Report), ¶¶ 146, 199, 212.) As such, access to MGI's knowledge and documents received from its contractor, ESISAR, during this critical time of the alleged invention is needed to understand what MGI believed to be inventive over the prior art.

Objs. at 12 (citation omitted). Defendant further argues that “MGI does not dispute its relevance nor present any evidence that a reasonable search for ESISAR documents would result in any burden or expense that outweighs its likely benefit.” Reply at 9.

Defendant's request to compel ESISAR documents was presented to the Special Master in conjunction with the above-discussed overly broad request for documents regarding many different printheads from various manufacturers, and Defendant does not persuasively demonstrate that Plaintiff is withholding any relevant documents that have any probative value. Also, as discussed during the November 14, 2023 hearing, Defendant made no effort to obtain any discovery directly from ESISAR regarding what ESISAR provided to Plaintiff. Defendant's objection to the Special Master's denial of Defendant's request to compel additional ESISAR documents is overruled.

D. Additional Deposition of Edmond Abergel

In proceedings with the Special Master, Defendant sought an order compelling Plaintiff to produce Edmond Abergel (Plaintiff's President, who is also the sole named inventor on two of the patents-in-suit) in the United States for an additional deposition regarding Konica Minolta information produced by Plaintiff after his first deposition. See SM-14 at 13. SM-14 ordered production of Konica Minolta drive board manuals and operation manuals but did not order any additional deposition of Edmond Abergel. See id. at 13 & 37. Defendant argues that the Court should order such a deposition because:

[O]nly Mr. Abergel had knowledge of Konica Minolta and ESISAR's involvement during alleged invention development, and—thus—only he can speak to the circumstances upon which MGI received and used MGI's late produced Konica Minolta and/or ESISAR information.
*4 * * *
Defendant would be fundamentally prejudiced if Edmond Abergel—who was MGI's corporate designee on technical topics concerning the alleged invention—is permitted to come to trial and testify on matters for which Defendant never had the opportunity to cross-examine ....

Objs. at 13.

Plaintiff responds that “MGI had already produced documents concerning the Konica Minolta printhead and ESISAR research prior to Mr. Abergel's earlier deposition, and Duplo questioned Mr. Abergel extensively on these two subjects.” Opp'n at 10. Plaintiff also argues that “the complained-of documents were timely produced pursuant to a good-faith and expansive view of SM-11 that only required production before the close of discovery[, a]nd SM-11, in turn, resulted from Duplo's belated August 2 and 4 motion to compel.” Id. at 11.

Defendant replies that “MGI concedes that only Edmond Abergel (as opposed to other MGI witnesses) could speak to these Konica Minolta documents, yet MGI did not produce the majority of its Konica Minolta documents until after his deposition—violating even the Special Master's instructions in this regard.” Reply at 9 (citing Ex. 27, July 21, 2023 Hr'g Tr. at 37:21– 25 (“And if any documents need to be produced that are associated with those witnesses that are necessary to properly depose those witnesses, then those documents should be produced before the deposition.”)). “At issue,” Defendant argues, “is not whether Defendant was able to depose Mr. Abergel as to his knowledge of Konica Minolta documents generally, but Mr. Abergel's knowledge of documents produced after his deposition that Defendant never had the opportunity to explore with Mr. Abergel and as to which other MGI witnesses deferred to Mr. Abergel as being the one with knowledge.” Id. at 10.

On balance, Defendant does not justify extensively re-deposing Edmond Abergel. Defendant questioned Edmond Abergel regarding Konica Minolta and ESSISAR during his deposition in August 2023. See Opp'n, Ex. A, Aug. 3, 2023 E. Abergel dep. at 188:10–201:15, 202:5–215:18, 257:1–259:5.

The Court, however, finds that a limited additional deposition is appropriate so long as it is narrowly tailored to documents produced after Edmond Abergel's deposition. Accordingly, the deposition will be limited to the following lines of questioning (which are based on questions proposed by Defendant at the hearing on November 14, 2023) regarding the documents identified by Defendant (MGI_012736, MGI_012737, MGI_012760, MGI_013185, MGI_013375, MGI_013566, MGI_013764, MGI_013449, MGI_012740, MGI_013185, MGI_013883):

How were these documents obtained, and where were they obtained from?
How is MGI's waveform different from the waveforms disclosed in these documents?
How does the functionality described in these documents compare to the teachings of the asserted patents?
What other knowledge had MGI received about the Konica Minolta printheads that was similar to what is in these documents about waveforms and control of waveforms? How and when did MGI gain any such knowledge?
What training or development support, if any, did Konica Minolta provide regarding the waveforms that are discussed in these documents?
How does MGI's control of its waveforms compare to what is disclosed in these documents?

As to the Kyocera documents (MGI_014945, MGI_014947) cited by Plaintiff's technical expert, Dr. Ruoxi Ma, the Court will allow Defendant to question Edmond Abergel regarding the following lines of questioning:

How were these documents obtained, and where were they obtained from?
What communications has MGI had with Kyocera regarding these documents?
How does what is described in these documents compare to the teachings of the asserted patents?

The Court finds that the other lines of questioning proposed by Defendant are excessive in scope and not narrowly tailored to the documents at issue.

Defendant's objection to the Special Master's denial of Defendant's request for an additional deposition of Edmond Abergel is therefore SUSTAINED INPART, limited to the lines of questioning listed above, and is otherwise overruled. As the Court stated at the November 14, 2023 hearing, the Court is inclined to permit this additional deposition to occur by videoconference, but the Court leaves the time, place, and manner of this deposition to the discretion of the Special Master.

E. Spoliation as to MGI U.S.A.'s Dissolution in 2021

In SM-14, the Special Master denied Defendant's request for spoliation sanctions, finding that “Defendant's allegations of loss of relevant documents are too speculative to warrant any finding of spoliation,” and “even assuming for the sake of argument that relevant documents were lost, Defendant identifies no persuasive evidence of any bad faith or any intent to deprive an opponent of evidence.” SM-14 at 32.

Up until 2017, Plaintiff's distributor in the United States was MGI U.S.A. Objs at 6. During 2017, Konica Minolta became Plaintiff's distributor in the United States, and MGI U.S.A. had a limited role providing support to Konica Minolta until 2021. Id. Prior to dissolution, MGI U.S.A. sent technical documents to Plaintiff and sent sales documents to Konica Minolta. Id. at 6–7. Any documents that were not transferred were then lost or destroyed upon dissolution of MGI U.S.A. in December 2021. Id. at 7.

Defendant submits that, after SM-14, Plaintiff served an expert report relying on U.S.-specific profit information contained in a French language document that Plaintiff produced “just before the close of fact discovery” but after Defendant deposed Victor Abergel (Plaintiff's Rule 30(b)(6) designee regarding financial information). Id. at 7–8.

Defendant argues that spoliation sanctions are warranted because “the contents of these spreadsheets [relied upon by Plaintiff's damages expert]—due to MGI's destruction of data— cannot otherwise be challenged by any of the original U.S. data and documents that were deleted during MGI U.S.A.'s dissolution.” Id. at 8–9. Defendant summarizes the chronology as follows:

MGI U.S.A. handled MGI's U.S. sales, marketing, and various services such as installation, training, and repairs;
MGI made Konica Minolta its exclusive U.S. distributor in 2016;
MGI and MGI U.S.A., together, sent a notice letter to Defendant in 2017;
MGI U.S.A. continued to operate until late 2021, providing services and support to the sales team for Konica Minolta (its exclusive distributor), including how to target the right customers and make the right sales arguments;
MGI U.S.A. dissolved in December 2021, and one of MGI's corporate representatives, Michael Abergel, testified that when MGI U.S.A. was dissolved some documents went to MGI and some to Konica Minolta, and the rest were destroyed;
MGI sued Defendant in May 2022;
Defendant subpoenaed MGI USA and Konica Minolta, both of whom are represented by the same counsel as MGI, but both claimed to have no responsive documents, referring Defendant back to MGI;
MGI produced almost nothing concerning MGI U.S.A.'s sales, providing instead only a handful of MGI U.S.A. sales reports;
Another MGI corporate representative, Victor Abergel, testified that MGI does not track price and profitability at the product or services level or specific to the U.S., but instead tracks overall global price and profits and do not follow the sales product-by[-]product; and
After Victor Abergel's deposition, and only days before the close[ ] of fact discovery, MGI produced product-specific U.S. profitability data.

Objs. at 14–15 (emphasis omitted).

Federal Rule of Civil Procedure 37(e) states as follows regarding failure to preserve electronically stored information (“ESI”):

(e) Failure to Preserve Electronically Stored Information. If electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court:
(1) upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice; or
(2) only upon finding that the party acted with the intent to deprive another party of the information's use in the litigation may:
(A) presume that the lost information was unfavorable to the party;
(B) instruct the jury that it may or must presume the information was unfavorable to the party; or
(C) dismiss the action or enter a default judgment.

Fed. R. Civ. P. 37(e). The moving party “has the burden of demonstrating sanctionable conduct and prejudice.” Rev 973 LLC v. MourenLaurens, No. CV 98-10690 AHM, 2009 WL 273205, at *1 (C.D. Cal. Feb. 2, 2009) (Matz., J.). The burden to show spoliation is a preponderance of the evidence. RG Abrams Ins. v. Law Offices of C.R. Abrams, 342 F.R.D. 461, 502 (C.D. Cal. 2022).

Plaintiff does not dispute that it had a duty to preserve evidence as early as 2017, when MGI U.S.A. sent a notice letter to Defendant regarding potential litigation and when Plaintiff sued other Duplo entities in France.

Defendant argues that “documents were intentionally and selectively destroyed, which does not constitute reasonable steps to preserve potentially relevant documents.” Objs. at 18 (citations omitted). Defendant submits:

*7 MGI's damages expert now seeks to rely upon late-produced, allegedly key financial records (in French) that break down sales and profits by product and region (specifically, within the U.S.)—in a world where MGI U.S.A. admittedly deleted records (presumably in English), where MGI refused to provide translations during fact discovery, where Defendant's ability to test the truth of the matter asserted against its original source has been compromised, and where MGI's corporate designee (Victor Abergel) testified such information did not exist.
* * *
MGI's convenient lack of evidence regarding the U.S. market hides key facts about who purchases its machines, and at what price, and also any convoyed accessories and services they purchase.

Id. at 19.

Defendant submits it is being prejudiced because: “In its opening damages expert report, MGI relies on French-language financial documents to seek damages that significantly exceed the sales price of Defendant's products. Yet, Defendant is handcuffed in rebutting these French documents with the original U.S. source data because such data was destroyed.” Objs. at 21.

“Defendant requests that MGI be precluded from seeking lost profits against Defendant and [precluded from] using U.S. profitability data to support reasonable royalty damages, and other appropriate relief.” Objs. at 22. Defendant submits that it has been prejudiced by Plaintiff's failure to preserve documents and that Rule 37(e)(1) does not require proof of intentional destruction but rather requires only a showing of prejudice.

Plaintiff responds that “Duplo has failed to identify a single relevant document that was allegedly destroyed by MGI USA.” Opp'n at 11. Plaintiff submits that the testimony of Michael Abergel (MGI U.S.A.'s Chief Executive Officer prior to its dissolution) is unrebutted that Plaintiff possessed all sales and profit information about United States sales during the operation of its wholly-owned subsidiary MGI U.S.A., that Plaintiff continued to possess this same information after MGI U.S.A.'s dissolution, and that all such information has been produced. Id. Plaintiff also submits that “the specific sales information on every single JetVarnish product sold into the United States over a decade has been produced by MGI,” and “MGI does not keep costs on a country-by-country basis, but it nevertheless produced documents showing its worldwide costs per product line, which included the US costs.” Id. at 13. Finally, Plaintiff submits that “the documents relied on by MGI's financial expert were all based on the MGI financial records produced to Duplo (including all consolidated financial statements and profit/loss statements), and there is nothing in these documents to suggest otherwise.” Id. at 13–14.

Defendant replies that “[t]he selective and intentional destruction of documents [upon dissolution of MGI U.S.A.] does not constitute reasonable steps to preserve documents.” Reply at 10–11. Defendant submits that “MGI provides no explanation for how or why it chose to “discard[ ] everything that was not with Konica Minolta or MGI France.” Id. at 11 (citation omitted). Defendant argues that the loss of MGI U.S.A. documents is prejudicial and inexcusable because Plaintiff is a sophisticated company with prestigious United States counsel (and the same was true as to MGI U.S.A.), and “MGI U.S.A.'s relevance to this case is beyond question, as it owned two of the patents-in-suit prior to its dissolution (when it assigned the patents to Plaintiff MGI), and for many years it was the sales arm for MGI within the United States, selling and servicing the very products on which MGI bases its lost profits damages claim.” Id. at 12–13. Defendant concludes:

*8 [W]hile MGI focuses the Court's attention on what allegedly remains, it ignores the totality of the events surrounding the destruction of MGI U.S.A. documents—its notice letter, its silence, its litigation in France, its dissolution of MGI U.S.A., its destruction of documents, its filing of this lawsuit, its representation that basic documents requested by defendants no longer existed, its selective production of financial data after the deposition of its corporate financial witness, and its selective production of financial data after the close of fact discovery altogether. MGI's destruction of documents has prevented Defendant from being able to fully evaluate MGI's claim for lost profits, and Fed. R. Civ. P. 37 requires only a finding of prejudice—under a preponderance of the evidence standard—for the Court to grant relief. While Defendant submits the evidence clearly shows an intent to deprive Defendant of potentially relevant documents in this litigation, and warrants precluding MGI from claiming lost profits or from relying upon U.S. profitability data to support a reasonable royalty on a record whose integrity has been compromised, if there is any question as to the credibility of MGI's produced documents vis-à-vis its destruction of documents whose contents no party will ever be able to verify, Defendant respectfully asks the Court to allow this issue to be presented and decided by the jury at trial.

Id. at 14–15.

The RG Abrams case cited by Defendant outlines the Rule 37(e)(1) prejudice analysis as follows:

Rule 37(e)(1) sanctions require a showing of prejudice to the party seeking the information. Fed. R. Civ. P. 37(e)(1). If the party seeking the information has been prejudiced, the Court may order whatever measures are necessary to cure the prejudice. Id. Prejudice exists where “the [spoiling party's] actions impaired [the moving party's] ability to go to trial or threatened to interfere with the rightful decision of the case.” United States ex rel. Wiltec Guam, Inc. v. Kahaluu Constr. Co., 857 F.2d 600, 604 (9th Cir. 1988). In Anheuser-Busch, Inc. v. Natural Beverage Distributors, 69 F.3d 337, 354 (9th Cir. 1995), the Ninth Circuit found prejudice when a party's refusal to provide certain documents “forced [plaintiff] to rely on incomplete and spotty evidence” at trial. Rule 37(e)(1) does not always place the burden of proving or disproving prejudice on one party or the other. Fed. R. Civ. P. 37 advisory committee's notes to 2015 amendment. The Committee Notes acknowledge that, in some circumstances, determining the content of lost ESI will be difficult and placing the burden of proving prejudice on the moving party may be unfair. Id. Courts have discretion under Rule 37(e)(1) to determine how to assess prejudice on a case-by-case basis. Id. “Proving that lost evidence is relevant can be a difficult task, however, because the evidence no longer exists.” Fast [v. GoDaddy.com LLC], 340 F.R.D. [326,] 339 [(D. Ariz. 2022)]. Thus, a party need only “come forward with plausible, concrete suggestions as to what [the destroyed] evidence might have been.” Id. (citations omitted, internal quotation marks omitted).

RG Abrams Ins. v. Law Offices of C.R. Abrams, 342 F.R.D. 461, 507 (C.D. Cal. 2022) (Aenlle-Rocha, J., adopting findings of Audero, M.J.)

Plaintiff's Rule 30(b)(6) designee regarding financial information, Victor Abergel, testified that Plaintiff did not have any profit information specific to the United States. See Objs., Ex. 14, Aug. 2, 2023 V. Abergel dep. at 220:9–17 (“We have the price of the sales.... [W]e basically do an average on the products sold worldwide with respect to the profits.”), 222:7–223:11, 224:25– 227:10 (“Q. Does MGI maintain documents or data from which you could obtain the profit margin for the JETvarnish ink in the United States. A. No.”).

Plaintiff's damages expert, however, has served a report that cites profit margin data that appears to be specific to the United States. See Reply at 12 (translated version); see Objs., Ex. 18, MGI_014213 (French-language version). Defendant submits that Plaintiff produced the French-language version of this document “just before the close of fact discovery.” Objs. at 8.

Defendant argues it is being prejudiced because no underlying data is available for Defendant to challenge, and Defendant submits that it “identifies several plausible categories of deleted documents (evidence regarding the U.S. market, MGI U.S.A.'s target customers, MGI U.S.A.'s target prices, convoyed accessories and services, and MGI's business dealings with Konica Minolta both before and after Konica Minolta became its exclusive distributor)—which MGI U.S.A. previously confirmed in its subpoena responses no longer exist,” as well as “MGI U.S.A. documents showing U.S. costs,” “detailed sales logs (by order date, product, customer, price, delivery date), customer purchase orders and invoices, and documents describing expenses incurred by MGI U.S.A. in the process of selling and servicing MGI products that allegedly practice the patents-in-suit.” Reply at 13.

*9 At its core, however, Defendant's assertion that “MGI has not produced documents that would typically exist at a sales entity such as MGI U.S.A.” (Obj. at 19 (emphasis added)) is founded upon speculation. Defendant cites testimony by Michael Abergel (MGI U.S.A.'s Chief Executive Officer prior to its dissolution) that documents were destroyed upon dissolution of MGI U.S.A.:

Q. When MGI USA was dissolved, were any documents destroyed?
A. Yes.
[Objection to form]
[A.] We discarded everything that was not with Konica Minolta or MGI France.

Id., Ex. 13, July 28, 2023 M. Abergel dep. at 84:25–85:5. Yet, Defendant identifies no testimony or other evidence demonstrating that any relevant documents were destroyed or that any particular information has become unobtainable. For example, Defendant presents no testimony by Michael Abergel providing any detail regarding what documents were destroyed or even what substantive categories of documents were destroyed. See id.

On balance, Defendant fails to meet its burden to show spoliation or to otherwise justify any sanction. RG Abrams, 342 F.R.D. at 502. Moreover, Defendant's request to strike Plaintiff's claim for lost profits would go far beyond what might be “necessary to cure the prejudice.” Fed. R. Civ. P. 37(e)(1). Defendant's requested relief appears to “presume that the lost information was unfavorable,” which would be appropriate only upon finding “intent to deprive another party of the information's use in the litigation,” which Defendant has not shown. Fed. R. Civ. P. 37(e)(2).

Finally, the Micron case and the Laub case cited by Defendant are unpersuasive because both cases dealt with findings of bad faith, which Defendant has not shown in the present case. See Micron Tech., Inc. v. Rambus Inc., 917 F. Supp. 2d 300, 317–18 (D. Del. 2013) (Robinson, J.) (party “destroyed documents selectively”); id. at 321 (“A party who is guilty of intentionally shredding documents should not easily be able to excuse the misconduct by claiming that the vanished documents were of minimal import.”); see also Laub v. Horbaczewski, No. 17-6210-JAK(KS), 2020 WL 9066078, at *4 (C.D. Cal. July 22, 2020) (Stevenson, M.J.) (regarding selective preservation and destruction of documents). As found by the Special Master, “Defendant identifies no persuasive evidence of any bad faith or any intent to deprive an opponent of evidence.” SM-14 at 32. Rather, if anything, Plaintiff and MGI U.S.A. appear to have made an effort to preserve any evidence that might be of value rather than to destroy it. See Objs., Ex. 13, July 28, 2023 M. Abergel dep. at 82:25–84:24 (“Q. So when MGI USA was dissolved in 2021, the technical documents went to MGI France; correct? A. Correct. Q. When MGI USA was dissolved in 2021, the customer documents went to Konica Minolta; correct? A. Correct. Because they take care of the service of those customers.”).

Defendant's objection to the Special Master's denial of Defendant's request for spoliation sanctions is therefore overruled. The Court also denies Defendant's request to argue to the jury that it has been prejudiced by MGI U.S.A. having destroyed documents.

Nonetheless, Defendant persuasively argued at the November 14, 2023 hearing that the production of the above-discussed financial information near the close of fact discovery—after the depositions of Victor Abergel and Michael Abergel, who testified regarding financial topics—has caused some amount of prejudice. To mitigate this, the Court will allow an additional deposition of Victor Abergel and an additional deposition of Michael Abergel, each of which will be limited to the following lines of questioning (which are based on questions proposed by Defendant at the hearing on November 14, 2023) regarding the documents identified by Defendant (MGI_014213, MGI_014873, MGI_014874, MGI_014875, MGI_014878, MGI_014879):

When was this document created?
Who was involved in its creation?
What involvement if any did MGI's damages expert, Marcus Reading, have with respect to creation of this document?
How was it created?
Why was it created?
What is the source of the cost information reflected in this document?
How were you able to arrive at costs and profits on a product-by-product basis for the products identified in this document?
How were you able to narrow the data to United States only?
Who verified the accuracy of the information in the document?
How did they verify the accuracy of the information?
Where was the data reflected in this document originally obtained?
Have you or MGI gathered this data for Canada or Latin America?
What about other countries or regions?
How did you calculate data in this document by year from 2017 to the present, if at all?

Defendant's objection is therefore SUSTAINED IN PART such that, although the Court makes no finding of spoliation and imposes no sanctions, the potential prejudice to Defendant is mitigated by the Court allowing additional depositions of Victor Abergel and Michael Abergel limited to the lines of questioning listed above, and Defendant's objection is otherwise overruled. As the Court stated at the November 14, 2023 hearing, the Court is inclined to permit these additional depositions to occur by videoconference, but the Court leaves the time, place, and manner of these depositions to the discretion of the Special Master.

E. Arguments Regarding SM-11

Plaintiff's opposition brief argues that, at the hearing on Defendant's objections regarding SM-14 and SM-15, Defendant should not be permitted to argue any of its purported objections regarding SM-11 because Defendant has not noticed those purported objections for hearing. See Opp'n at 15–17.

In reply, Defendant argues the merits of its purported objections regarding SM-11. See Reply at 4–5.

Defendant's purported objections to SM-11 as to Konica Minolta and Kyocera printheads overlap with Defendant's objections as to SM-14, and those objections are addressed above. Defendant's other purported objections to SM-11 (and indeed any mention of SM-11), however, are absent from Defendant's opening brief on its objections to SM-14 and SM-15. Also, Defendant presented no arguments on any purported objections to SM-11 at the November 14, 2023 hearing.

The Court therefore does not address any of Defendant's purported objections to SM-11, in particular as to inventorship documents, organizational charts, and Mr. Régis Thienard.

IV. DISPOSITION

Defendant Duplo U.S.A. Corporation's Objections to Special Master's Order Nos. SM-14 and SM-15 (Dkt. 170) are hereby SUSTAINED IN PART and OVERRULED IN PART as set forth above. Any requested relief not granted above is hereby denied, and the Court makes no award of any fees.